[Federal Register Volume 76, Number 108 (Monday, June 6, 2011)]
[Rules and Regulations]
[Pages 32816-32838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-13819]
[[Page 32815]]
Vol. 76
Monday,
No. 108
June 6, 2011
Part III
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 434, 438, and 447
Medicaid Program; Payment Adjustment for Provider-Preventable
Conditions Including Health Care-Acquired Conditions; Final Rule
Federal Register / Vol. 76 , No. 108 / Monday, June 6, 2011 / Rules
and Regulations
[[Page 32816]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 434, 438, and 447
[CMS-2400-F]
RIN 0938-AQ34
Medicaid Program; Payment Adjustment for Provider-Preventable
Conditions Including Health Care-Acquired Conditions
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule will implement section 2702 of the Patient
Protection and Affordable Care Act which directs the Secretary of
Health and Human Services to issue Medicaid regulations effective as of
July 1, 2011 prohibiting Federal payments to States under section 1903
of the Social Security Act for any amounts expended for providing
medical assistance for health care-acquired conditions specified in the
regulation. It will also authorize States to identify other provider-
preventable conditions for which Medicaid payment will be prohibited.
DATES: These regulations are effective on July 1, 2011.
FOR FURTHER INFORMATION CONTACT: Venesa Day, (410) 786-8281, or Marsha
Lillie-Blanton, (410) 786-8856.
SUPPLEMENTARY INFORMATION:
Acronyms
To assist the reader, the following list of the acronyms are
used in this final rule:
AHRQ Agency for Healthcare Research and Quality
BPM Benefit Policy Manual
CABG Coronary artery bypass graft
CBO Congressional Budget Office
CDC Centers for Disease Control and Prevention
DVT Deep vein thrombosis
ESRD End-stage renal disease
DRA Deficit Reduction Act of 2005 (Pub. L. 109-171, enacted on
February 8, 2006)
FFP Federal financial participation
FY Fiscal year
HAC Hospital-acquired condition
HCAC Health care-acquired condition
ICR Information collection requirement
IH Inpatient Hospital
IPPS Inpatient prospective payment system
MS-DRG Diagnosis-related group
NCA National coverage analysis
NDC National coverage determination
NQF National Quality Forum
OACT [CMS] Office of the Actuary
OIG Office of Inspector General
OMB Office of Management and Budget
OPPC Other provider-preventable condition
PE Pulmonary embolism
POA Present on admission
PPC Provider-preventable condition
PRA Paperwork Reduction Act
RFA Regulatory Flexibility Act (September 19, 1980, Pub. L. 96-354)
RIA Regulatory impact analysis
SMDL State Medicaid Director Letter
SPA State plan amendment
UMRA Unfunded Mandates Reform Act of 1995 (Pub. L. 104-04, enacted
on March 22, 1995)
UTI Urinary tract infection
I. Background
Title XIX of the Social Security Act (the Act) authorizes Federal
grants to the States for Medicaid programs to provide medical
assistance to persons with limited income and resources. While Medicaid
programs are administered by the States, they are jointly financed by
the Federal and State governments. Each State establishes its own
eligibility standards, benefits packages, payment rates, and program
administration for Medicaid in accordance with Federal statutory and
regulatory requirements. Operating within broad Federal parameters,
States select eligibility groups, types, and range of services, payment
levels for services, and administrative and operating procedures. Each
State Medicaid program must be described and administered in accordance
with a Federally-approved ``State plan.'' This comprehensive document
describes the nature and scope of the State's Medicaid program, and
provides assurances that it will be administered in conformity with all
Federal requirements.
The Federal government pays its share of medical assistance
expenditures to the State on a quarterly basis according to a formula
described in sections 1903 and 1905(b) of the Act. Specifically,
section 1903 of the Act requires that the Secretary (except as
otherwise provided) pay to each State which has a plan approved under
title XIX, for each quarter, an amount equal to the Federal medical
assistance percentage of the total amount expended during such quarter
as medical assistance under the State plan.
Among the statutory requirements for Medicaid State plans, section
1902(a)(4) of the Act requires that State plans provide for methods of
administration as are found to be necessary by the Secretary for the
proper and efficient operation of the plan. Section 1902(a)(6) of the
Act requires that a State plan for medical assistance provide that the
State agency will make such reports, in such form and containing such
information, as the Secretary may from time-to-time require, and comply
with such provisions as the Secretary may from time-to-time find
necessary to assure the correctness and verification of such reports.
In addition, section 1902(a)(19) of the Act requires that a State plan
for medical assistance provide such safeguards as may be necessary to
assure that eligibility for care and services under the plan will be
determined, and such care and services will be provided, in a manner
consistent with simplicity of administration and the best interests of
the recipients.
A. The Medicare Program and Quality Improvements Made in the Deficit
Reduction Act of 2005 (DRA) (Pub. L. 109-171)
Title XVIII of the Act provides authority for the Secretary to
operate the Medicare program, which provides payment for certain
medical expenses for persons 65 years of age or older, certain disabled
individuals, and persons with end-stage renal disease (ESRD). Medicare
benefits include inpatient care, a wide range of medical services, and
outpatient prescription drugs.
The Medicare statute authorizes the Secretary, in the course of
operating the Medicare program, to develop, implement, and monitor
quality measures, as well as take other actions, to ensure the quality
of the care and services received by Medicare beneficiaries.
Payment under the Medicare program for inpatient hospital services
is generally based on the ``inpatient prospective payment system''
(IPPS) described in section 1886(d) of the Act. Hospitals receive a
payment for each inpatient discharge based in part on diagnosis codes
that identify a ``diagnosis-related group'' (MS-DRG). Assignment of an
MS-DRG can take into account the presence of secondary diagnoses, and
payment levels are also adjusted to account for a number of hospital-
specific factors.
Section 5001(a) of the Deficit Reduction Act of 2005 (Pub. L. 109-
171, enacted on February 8, 2006) (DRA) amended section 1886(b)(3)(B)
of the Act to expand the set of hospital quality measures collected by
Medicare. In particular, this provision directed the Secretary to start
collecting baseline measures set forth by the Institute of Medicine in
its November 2005 report. In FY 2008 and subsequent years, the
Secretary was required to add other measures that reflect consensus
among affected parties. The provision also allowed the Secretary to
replace and update existing quality measures. The statute mandates that
the Secretary establish a process for hospitals to review data that
will be made public
[[Page 32817]]
and, after that process is complete, requires the Secretary to post
measures on the Hospital Compare Internet Web site.
Section 5001(c) of the DRA amended section 1886(d)(4) of the Act to
adjust payment to hospitals for certain preventable hospital-acquired
conditions (HACs) identified by the Secretary. Specifically, under
section 1886(d)(4)(D)(iv) of the Act, the Secretary is required to
select codes associated with at least two conditions to be identified
as HACs. These conditions are required to have the following
characteristics: (a) High cost or high volume or both; (b) result in
the assignment of a case to a MS-DRG that has a higher payment when
present as a secondary diagnosis; and (c) could reasonably have been
prevented through the application of evidence-based guidelines. Section
5001(c) of the DRA provides for revision of the list of conditions from
time to time, as long as it contains at least two conditions.
B. Previously Specified Medicare HACs
Under the provisions of section 1886(d)(4)(D)(ii) of the Act, when
a HAC is not present on admission (POA), but is reported as a secondary
diagnosis associated with the hospitalization, the Medicare payment
under IPPS to the hospital may be reduced to reflect that the condition
was hospital-acquired. More specifically, the hospital discharge cannot
be assigned to a higher paying MS-DRG if the secondary diagnosis
associated with the HAC was the only reason for this assignment.
Since October 1, 2007, hospitals subject to the IPPS have been
required to submit information on Medicare claims specifying whether
diagnoses were POA. The POA indicator reporting requirement and the HAC
payment provision apply to IPPS hospitals only. This requirement does
not apply to hospitals exempt from the IPPS.
The following is a list of the Medicare HACs for FY 2011 (75 FR
50084 through 50085):
Foreign Object Retained After Surgery.
Air Embolism.
Blood Incompatibility.
Stage III and IV Pressure Ulcers.
Falls and Trauma.
+ Fractures.
+ Dislocations.
+ Intracranial Injuries.
+ Crushing Injuries.
+ Burns.
+ Electric Shock.
Manifestations of Poor Glycemic Control.
+ Diabetic Ketoacidosis.
+ Nonketotic Hyperosmolar Coma.
+ Hypoglycemic Coma.
+ Secondary Diabetes with Ketoacidosis.
+ Secondary Diabetes with Hyperosmolarity.
Catheter-Associated Urinary Tract Infection (UTI).
Vascular Catheter-Associated Infection.
Surgical Site Infection Following:
+ Coronary Artery Bypass Graft (CABG)--Mediastinitis.
+ Bariatric Surgery.
--Laparoscopic Gastric Bypass.
--Gastroenterostomy.
--Laparoscopic Gastric Restrictive Surgery.
+ Orthopedic Procedures.
--Spine.
--Neck.
--Shoulder.
--Elbow.
Deep Vein Thrombosis (DVT)/Pulmonary Embolism (PE).
+ Total Knee Replacement.
+ Hip Replacement.
The Secretary may revise this list upon review and does so through
notice and comment rulemaking.
C. Previously Specified Medicare National Coverage Determinations (NCD)
In 2002, the National Quality Forum (NQF) published ``Serious
Reportable Events in Healthcare: A Consensus Report'', which listed 27
adverse events that were ``serious, largely preventable and of concern
to both the public and health care providers.'' These events and
subsequent revisions to the list became known as ``never events.'' This
concept and need for the proposed reporting led to NQF's ``Consensus
Standards Maintenance Committee on Serious Reportable Events,'' which
maintains and updates the list which currently contains 29 items.
The Medicare program has addressed certain ``never events'' through
national coverage determinations (NCDs). Similar to any other patient
population, Medicare beneficiaries may experience serious injury and/or
death if they undergo erroneous surgical or other invasive procedures
and may require additional healthcare to correct adverse outcomes that
may result from such errors. To address and reduce the occurrence of
these surgeries, CMS issued three NCDs. Under these NCDs, CMS does not
cover a particular surgical or other invasive procedure to treat a
particular medical condition when the practitioner erroneously
performs: (1) A different procedure altogether; (2) the correct
procedure but on the wrong body part; or (3) the correct procedure but
on the wrong patient. Medicare will also not cover hospitalizations and
other services related to these non-covered procedures.
D. Prior Guidance on Medicaid HACs and NCDs in Response to Medicare's
Policy
Section 5001(c) of the DRA addressed only payment under the
Medicare IPPS and did not require that Medicaid implement nonpayment
policies for HACs. However, in light of the Medicare requirements, we
encouraged States to adopt payment prohibitions on provider claims for
HACs to coordinate with the Medicare prohibitions under section
1886(d)(4)(D) of the Act. To accomplish this task, we issued State
Medicaid Director Letter (SMDL) 08-004 on July 31, 2008. In
the July 31, 2008 SMDL, we noted that there was variation in how State
Medicaid programs had addressed such claims in the past. The letter
noted that nearly 20 States already had, or were considering,
eliminating payment for some or all of the 28 conditions on the NQF's
list of Serious Reported Events. Other States had more limited efforts
to deny payment for services related to such conditions because the
services were ``medically unnecessary'' in light of the primary
diagnosis.
Recognizing this variation and addressing the immediate concern of
the States over Federal cost-shifting that could result from the
Medicare HAC policy as applied to those who are dually-eligible for
Medicare and Medicaid, we took a flexible position in the July 31, 2008
SMDL guidance on State Medicaid handling of the issue. The SMDL
indicated that States seeking to implement HAC nonpayment policies
could do so by amending their Medicaid State plans to specify the
extent to which they would deny payment for an HAC. Those interested
only in avoiding secondary liability for Federal Medicare denials of
HACs and NCDs in the case of dual-eligibles could do so by amending
their State Plan to indicate that payment would not be available for
HACs and the procedures described in the three NCDs that are not paid
by Medicare. States that wanted broader payment prohibitions could
indicate that payment would not be available for conditions specified
in the State plan amendment (SPA), or that meet criteria identified in
the SPA.
E. Section 2702 of the Affordable Care Act
Section 2702 of the Affordable Care Act requires that the Secretary
implement Medicaid payment adjustments for health care-acquired
conditions (HCACs). Section 2702 of the
[[Page 32818]]
Affordable Care Act did not grant the Secretary new authorities,
indicating that existing statutory authorities are sufficient to
fulfill the obligation. Section 2702(a) of the Affordable Care Act sets
out a general framework for application of Medicare prohibitions on
payment for HCACs to the Medicaid program. Section 2702(a) of the
Affordable Care Act first directs the Secretary to identify current
State practices that prohibit payment for HCACs and to incorporate the
practices identified, or elements of such practices, which the
Secretary determines appropriate for application to the Medicaid
program in regulations. Section 2702(a) of the Affordable Care Act then
requires that, effective as of July 1, 2011, the Secretary prohibit
payments to States under section 1903 of the Act for any amounts
expended for providing medical assistance for HCACs specified in
regulations. Such regulations must ensure that the prohibition on
payment for HCACs shall not result in a loss of access to care or
services for Medicaid beneficiaries.
Section 2702(b) of the Affordable Care Act defines the term
``health care-acquired condition'' as ``a medical condition for which
an individual was diagnosed that could be identified by a secondary
diagnostic code described in section 1886(d)(4)(D)(iv) of the Act.''
Section 2702(c) of the Affordable Care Act specifically requires
that the Secretary, in carrying out section 2702 of the Affordable Care
Act, apply the regulations issued under section 1886(d)(4)(D) of the
Act relating to the prohibition of payments based on the presence of a
secondary diagnosis code specified by the Secretary in such
regulations, as appropriate for the Medicaid program. The Secretary may
exclude certain conditions identified under title XVIII of the Act for
nonpayment under title XIX of the Act when the Secretary finds the
inclusion of such conditions to be inapplicable to beneficiaries under
title XIX of the Act.
We believe, and confirmed through public comment, that
incorporating Medicare's HACs in Medicaid's policy is inherently
complex because of population differences across programs. We fully
understand that the HACs developed for Medicare's population will not
directly apply to various subsets of Medicaid's population. While we
have established Medicare as a baseline, we understand that States
will, through their payment policies, appropriately address these
differences.
F. Requirement To Review Existing State Practices Prohibiting
Nonpayment Policies for HCACs
Section 2702 of the Affordable Care Act requires that the Secretary
identify current State practices that prohibit payment for HCACs and
incorporate those practices, as appropriate, into Medicaid regulations.
To fulfill the statutory direction, we reviewed existing SPAs
originally submitted in response to the July 31, 2008 SMDL
(08-004). We also researched State HCAC-related nonpayment
policies that had been implemented outside of Medicaid State plans. We
reviewed State quality assurance programs, pay-for-performance
programs, reporting requirements and procedures, and payment systems.
We reviewed various articles, reports, summaries, and data bases
pertaining to States' existing practices concerning hospital and HCACs
and infections. For a list of the items considered, see the February
17, 2011 proposed rule (76 FR 9283, 9286 through 9287).
We discussed internally within CMS, as well as with interagency
partners at the Agency for Healthcare Research and Quality (AHRQ) and
the CDC to ensure that the proposed regulations were consistent with
other regulations, policies, and procedures currently in existence
surrounding this issue. We also met with them to gain information on
areas where we could mirror existing processes to eliminate undue
burdens on States or providers.
We issued a State survey to capture data from all related payment
policies regardless of whether they were implemented as a result of the
July 31, 2008 SMDL or whether such practices are currently detailed in
the State plan. We have received helpful information from a few States
through the survey and have reviewed other information that has been
helpful in explaining current State processes for making payment
adjustments for HCACs. Subsequent to the publication of the survey, we
held all-State calls where we answered questions in response to the
survey, had States with existing policies talk about their experiences,
and listened to discussion regarding the implementation of the HCAC
policy.
We met with nongovernmental partners including the NQF, the
National Academy for State Health Policy, the National Association of
Children's Hospitals, the Joint Commission, and State Medicaid Medical
Directors. Most of these organizations are primarily focused on State
program development and/or quality issues. We reached out to them to
ensure that the proposed policies were consistent with current industry
understanding of both State payment and quality improvement goals. In
our discussions with these organizations, we were able to discuss State
experiences on a broad, national level that had been gained from
working with States. During these meetings, we discussed a number of
issues related to the proposed rule and State concerns in implementing
this provision. For instance, it was clear from many of our discussions
that States hoped to be able to look to this provision to provide
additional definition regarding the types of conditions to identify for
nonpayment, as well as to provide some support in working with provider
communities to which these policies would be applied.
G. Current State Practices Prohibiting Payment for HACs, HCACs, and
Other Similar Events
We found that 29 States do not have existing HCAC-related
nonpayment policies. Most of the 21 States that currently have HCAC-
related nonpayment policies identify at least Medicare's HACs for
nonpayment in hospitals. However, it is important to note that at least
half of the existing policies we reviewed exceeded Medicare's current
HAC requirements and policies, either in the conditions identified, the
systems used to indicate the conditions, or the settings to which the
nonpayment policies applied. These policies vary tremendously from
State to State in the authority used to enact the policies, the
terminology used, the conditions identified, State's utilization of the
current Medicare HAC list, the service settings to which nonpayment
policies are applied, reporting requirements, and the claims processing
of the nonpayment policies.
All of the States with HCAC-related nonpayment policies have
implemented provisions that would protect the State from dual-eligible
liability either by directly prohibiting payment for Medicare crossover
claims or by relying on existing State plan authority to deny payment
for claims previously denied by Medicare.
We found that 17 of the States implemented Medicaid specific
policies that reduce payment for services provided to Medicaid
beneficiaries. Most of the States implementing Medicaid specific
policies identify at least Medicare's current list of HACs, and nearly
half of those States defined a list that was different from Medicare's
current list of HACs for nonpayment.
[[Page 32819]]
Similar variation exists in States' plan language identifying
Medicare's NCD for nonpayment ranging from mirroring Medicare to
completely breaking from Medicare. We do note, however, that the nature
of the NQF serious reportable events, like surgery on the wrong body
part, proper surgery wrong patient, and wrong surgery, is so severe
that States were likely to have relied on State coverage provisions and
appropriate care requirements to deny payment for these events.
We also found that States use different general terminology for
HCAC-related nonpayment policies even though many of the conditions
identified overlap, are from the same sources, and do not generally
vary in medical definition from one list to the other. For example, 3
States identify ``air embolism'' as a condition for nonpayment under
its plans with the condition understood to be consistently defined for
medical purposes. However, one State includes air embolisms on its list
of ``HACs''; another includes the same condition as a ``Serious Adverse
Event''; and the third includes it on a list of ``Medical Errors.''
We also found that at least 7 of the States with HCAC-related
nonpayment policies apply those policies to settings other than the
inpatient hospital setting required by Medicare, including both
physicians and ambulatory surgical centers.
Variation across States is not surprising given the States have
been permitted broad flexibility in defining their HCAC policies and
programs. However, we attribute some of the variety on this issue to
the wealth of information and evidence-based guidelines available to
States, either through their own experiences and resources or through
industry researched and developed resources related to health system
quality. Data gathered on the conditions identified, reporting
strategies, and implementation guidelines indicate that States have
relied heavily on existing health system quality improvement research
to define requirements while tailoring policies appropriate to their
own systems. In addition, our research indicates that States' HCAC-
related nonpayment policies are mainly intended to drive broader health
system agendas to promote quality outcomes. We believe the use of
evidence-based measures and the push for health system quality are an
appropriate foundation for the proposed regulation. We proposed to
implement Medicaid HCAC regulations that would provide some consistency
across health care payers (Medicare and Medicaid). At the same time, we
also proposed to accommodate State flexibility to design individual
HCAC policies for nonpayment, quality-related programs suitable for
their own Medicaid program and health marketplace to the extent such
policies go beyond Federally-established minimum standards. The July
31, 2008 SMDL (08-004) instructed States to submit SPAs to
enact nonpayment provisions. Thirteen States submitted SPAs to include
PPC related nonpayment provisions in their Medicaid State plans. Other
States that implemented these policies through some other authority
like State law or administrative procedures will be required to submit
new SPAs for review and work with CMS to ensure their policies,
effective July 1, 2011, are in line with the final provisions of this
rule.
H. Provider Preventable Conditions
The final rule includes the umbrella term, ``Provider-Preventable
Conditions (PPC)'' which is defined as two distinct categories, Health
Care-Acquired Conditions (HCAC) and Other Provider-Preventable
Conditions (OPPC).
Health Care Acquired Conditions:
Apply to Medicaid inpatient hospital settings; and
Are defined as the full list of Medicare's HAC, with the
exception of Deep Vein Thrombosis/Pulmonary Embolism following total
knee replacement or hip replacement in pediatric and obstetric
patients, as the minimum requirements for States' PPC non-payment
programs.
Other Provider-Preventable Conditions include the following:
Apply broadly to Medicaid inpatient and outpatient health
care settings where these events may occur;
Are defined to include at a minimum, the three Medicare
National Coverage Determinations (surgery on the wrong patient, wrong
surgery on a patient, and wrong site surgery);
Would allow States to expand to settings other than IH
with CMS approval by nature of identifying events that occur in other
settings; and
Would allow States to expand the conditions identified for
non-payment with CMS approval, based on criteria set forth in the
regulation.
The final rule requires that States revise Medicaid plans to comply
with this provision and mandates that States implement provider self
reporting through claims systems. The final rule protects beneficiary
access to care by eliminating States' ability to unduly impact
providers for the occurrence of conditions identified. The final rule
requires that:
No reduction in payment for a provider preventable
condition will be imposed on a provider when the condition defined as a
PPC for a particular patient existed prior to the initiation of
treatment for that patient by that provider.
Reductions in provider payment may be limited to the
extent that the identified provider-preventable conditions would
otherwise result in an increase in payment; and the State can
reasonably isolate for nonpayment the portion of the payment directly
related to treatment for, and related to, the provider-preventable
conditions.
While the Statutory effective date is July 1, 2011, CMS intends to
delay compliance action on these provisions until July 1, 2012.
We proposed to exercise our authority under sections 1902(a)(4),
1902(a)(19), and 1902(a)(30)(A) of the Act to provide for
identification of provider preventable conditions (PPCs) as an umbrella
term for hospital and nonhospital acquired conditions identified by the
State for nonpayment to ensure the high quality of Medicaid services.
These statutory provisions authorize requirements that States use
methods and procedures determined by the Secretary to be necessary for
the proper and efficient administration of the State plan, to provide
care and services in the best interests of beneficiaries, and to
provide for payment that is consistent with quality of care,
efficiency, and economy.
With the introduction of this term, we proposed to include two
categories of PPCs--HCACs and other provider-preventable conditions
(OPPCs). HCACs would apply as required under the statute. OPPCs would
be applicable to other conditions that States identify and have
approved through their Medicaid State plans.
The inclusion of the new terms, PPCs and OPPCs, is consistent with
the implementation of a broader application of this policy which allows
us to appropriately incorporate existing State practices. The adoption
of a new term is necessary because the term, ``health care-acquired
condition'' is very narrowly defined in the Statute and does not
provide for the inclusion of conditions other than those identified as
HACs for Medicare, even excludes the three Medicare NCDs. Additionally,
the Affordable Care Act definition of HCACs only applies to the
inpatient hospital setting.
We considered a broader definition of the term, ``health care-
acquired conditions,'' attempting to isolate the idea of the actual
condition from the setting in which it occurred. Section
[[Page 32820]]
1886(d)(4)(D)(iv) of the Act applies specifically to conditions
applicable to inpatient hospital patients and reimbursed under the
IPPS. We did look to the Affordable Care Act in creating the terms PPCs
and OPPCs.
We did look to the Affordable Care Act in creating the terms PPC
and OPPC. Section 3008(b) of the Affordable Care Act, ``Study And
Report On Expansion Of Healthcare Acquired Conditions Policy To Other
Providers,'' requires that Medicare study the effects of expanding its
existing policy to other providers. We adopted the ``Other Providers''
term to remain consistent with Medicare in the potential expansion of
its policy.
In looking to expand the overall policy, we considered a number of
other terms but determined that many of them like ``adverse events'' or
``serious reportable events'' would generate confusion because they had
existing industry definitions that did not necessarily overlap with our
policy aims. We adopted the term ``Provider Preventable Condition'' for
use in Medicaid because it appropriately identified the scope of the
conditions and could act as a ``catch-all.'' Also, the term had not
been narrowly defined by use in Medicare, Medicaid, or in the industry
at-large.
I. Reporting of Results
After researching State, industry, and Federal information related
to the importance of reporting of quality data in driving improved
health outcomes, we proposed that a simplified level of reporting is
essential to creating a successful nonpayment policy both from the
payment and quality perspectives. We believe that any requirements for
provider reporting should provide a consistent format for States to
report State-specific measures; require that providers report
conditions identified for nonpayment when they occur regardless of a
provider's intention to bill; and not cause undue burden on States or
providers.
Quality reporting related to PPCs across States is inconsistent.
There are 27 States that require reporting of either hospital-acquired
infections, conditions, or some combination of both. Some of those
States require quality reporting but have not implemented associated
HCAC-related nonpayment policies. Others have HCAC-related nonpayment
policies, but have not implemented quality reporting requirements.
Existing national quality reporting formats do not support the
collection of data on HCACs and OPPCs for Medicaid beneficiaries.
Providers, mainly hospitals, are subject to reporting requirements in
addition to those imposed by States. For instance, most hospitals
report some quality measures to CMS, the Joint Commission, or the CDC.
We considered requiring hospitals to report to CMS or the National
Health Safety Network, but decided against this because of concerns
about the capacity within these systems to accommodate State specific
reporting of varied measures and the fact that this might not be
consistent with what most States are currently requiring providers to
report.
HACs, HCACs, and related policies represent liabilities for
providers beyond nonpayment provisions. In fact, Medicare and the
industry-at-large, have experienced nonclaiming or nonbilling on the
part of providers seeking to escape the liability that could come with
any type of notification of a particular event or to avoid negative
health outcome indicators.
In consideration of our research, we proposed a requirement that
existing claims systems be used as a platform for provider self-
reporting. We also proposed to include reporting provisions that would
require provider reporting in instances when there is no associated
bill. For instance, States could employ the widely used POA system in
combination with including edits in their Medicaid claims systems that
would indicate an associated claim and flag it for medical review.
J. States' Use of Payment Systems Other Than MS-DRG
We also found that States' payment systems will dictate the manner
in which States are able to operationalize PPCs related nonpayment
policies. For instance, some States reimburse using MS-DRG or some
other type of grouper software to price claims. As with Medicare, these
States may use the POA indicator system to identify claims and reduce
payments by programming the grouper to reduce payment through the
grouper. We note that a considerable number of States do not use
grouper systems to reimburse providers. These States may identify and
reduce payment for HCACs using methods appropriate to the specific
reimbursement system used within that State. We believe that the
proposed provision allows States this type of flexibility in designing
methodologies that would isolate amounts for nonpayment and allow
provider payment to be reduced based on a CMS-approved State plan
methodology that is prospective in nature.
II. Summary of the Provisions of the Proposed Rule and Analysis of and
Responses to Public Comments
A. General Discussion
We proposed to codify provisions that would allow States
flexibility in identifying PPCs that include, at a minimum, the HACs
identified by Medicare, but may also include other State-identified
conditions. This flexibility will extend to applying nonpayment
provisions to service settings beyond the inpatient hospital setting.
We believe that establishing Medicare as the minimum for the
application of this policy is appropriate at this point.
We encouraged States to consider the benefits and quality
implications of expanding HCAC quality and nonpayment policies as more
information becomes available from Medicare and State Medicaid
programs.
We proposed that PPCs are defined under two categories: HCACs and
OPPCs. We proposed to define the category of PPCs that would be
referred to using the term ``health care-acquired conditions'' (HCACs)
based on the definition of that term in section 2702(b) of the
Affordable Care Act. We also noted that the Secretary has authority to
update the Medicare HAC list as appropriate. As such, States are
required to comply with subsequent updates or revisions in accordance
with section 1886(d)(4)(D) of the Act.
We proposed to require that States implement requirements for
provider self-reporting of HCACs in the Medicaid claims payment
process. We also proposed to provide that States may identify similar
OPPCs related to services furnished in settings other than inpatient
hospitals, which would also be subject to a payment prohibition.
We further proposed that the treatment of these OPPCs will be
similar to the treatment of HCACs. State plans must provide for
nonpayment for care and services related to these OPPCs, and Federal
financial participation (FFP) will not be available in State
expenditures for such care and services related to OPPCs.
We received the following comments in response to our general
discussion.
1. General Comments
Comment: One commenter expressed the view that the original
Medicare HAC policy adopted by CMS in FY 2008 for hospitals subject to
the Medicare Inpatient Prospective Payment System (IPPS hospitals), in
response to the requirements of the DRA, was flawed policy and that
many physicians disagreed with the notion that some of
[[Page 32821]]
the identified Medicare HACs are reasonably preventable. The commenter
was opposed to extending these provisions to Medicaid and suggested
that CMS abandon the notion of a nonpayment policy for HACs in both
Medicare and Medicaid and replace it with a policy encouraging
compliance with evidence-based guidelines.
Response: We disagree. The Medicare HAC payment policy was
established under the authority of section 5001(c) of the DRA and has
been in place since FY 2008. Section 2702 of the Affordable Care Act
requires that CMS adopt similar regulations for the Medicaid program
taking into consideration existing State practices and the appropriate
application to the Medicaid program. This regulation, like the Medicare
HAC rule that preceded it, was developed in direct response to the
enactment of that provision. While we recognize that some of the PPCs
are not entirely preventable and should therefore be excluded from the
program. However, most of these PPCs are never events, which means they
should never happen, in the first place, and they are entirely
preventable if providers follow best medical practices. This is true
regardless of whether a patient is a senior citizen on Medicare or a
child on Medicaid. PPCs that used to be regarded as not entirely
preventable, like CLABSI (or CAUTI), have been shown to be preventable
by providers. We believe that the provisions of this rule will provide
a strong incentive for the provider to apply best medical practice and
seek innovative methods to prevent adverse outcomes. The HACs were
adopted by Medicare through an evidence-based process. In addition, the
definition used for OPPC in new Sec. 447.26 provides that States must
consider evidence-based guidelines in adopting optional PPCs.
Comment: Some commenters supported the policy of payment adjustment
when conditions were demonstrated to be reasonably preventable based on
the evidence, but thought that the population differences between
Medicare and Medicaid may present distinct issues and considerations in
considering events for nonpayment. Some commenters questioned the
appropriateness of the application of Medicare HACs to Medicaid
populations, specifically children and pregnant women.
Response: We agree that Medicare's population is generally
different than Medicaid's and that those differences may present
distinct issues and considerations. We realize that some categories of
Medicare's HACs, like Surgical Site Infection following CABG or
Bariatric surgery, are not typically applicable to pediatric or
obstetric populations because the underlying conditions associated with
each of Medicare's HACs will not typically occur in those populations,
thus limiting the frequency and relevance of the HAC. We reviewed each
of Medicare's HACs and the related evidence-based prevention protocols
to determine whether the final rule should specifically exclude any of
the conditions identified by Medicare, with respect to populations more
characteristic of Medicaid, particularly children and pregnant women.
We considered each in relation to the following:
(1) Clinical applicability. That is, does this condition occur in
pediatric and obstetric populations enough to significantly impact the
populations or provider reimbursement?
(2) Availability of evidence based guidelines appropriate to
prevention for the pediatric and obstetric populations. Are there
bundles specific to preventing these conditions and infections in the
pediatric and obstetric populations? If bundles do not exist, are there
other bundles that can be appropriately applied to these populations?
(3) Reasonable preventability. Can the conditions or infections be
reasonably prevented through the use of evidence based guidelines to
warrant financial penalties? Our research determined that certain
Medicare HACs, such as Foreign Objects Retained After Surgery, Air
Embolism, Blood Incompatibility, Stage 3 and 4 Pressure Ulcers, Falls
and Trauma, and Manifestations of Poor Glycemic Control, Catheter
Associated Urinary Tract Infections, and Vascular-Catheter Associated
Blood Stream Infections, are clinically applicable to all Medicaid
populations, including children and pregnant women. We determined that
there are evidence-based guidelines to support the reasonable
preventability of these conditions in pediatric and obstetric
populations, and that there is no indication that these prevention
guidelines would cause harm if appropriately applied. There was no
evidence to indicate that a provider adhering to these evidence based
guidelines could not reasonably prevent, though not absolutely prevent
these infections in every case in Medicaid populations.
Our research determined that Surgical Site Infection following
CABG, Bariatric Surgery, or Orthopedic procedures is not typically
applicable to children and pregnant women because it is not likely that
these populations would be subject to some of the primary surgical
procedures. However, we determined that there are evidence-based
guidelines to support the reasonable preventability of Surgical Site
Infection following the specified procedures when they do occur in
these populations. Furthermore, there is no indication that these
prevention guidelines would cause harm when appropriately applied.
There is no evidence to indicate that a provider adhering to these
evidence based guidelines could not reasonably prevent, though not
absolutely prevent, these infections in every case in Medicaid
populations.
Our research also determined that the Medicare HAC Deep Vein
Thrombosis/Pulmonary Embolism (DVT/PE) as related to a total knee
replacement or hip replacement is not a common occurrence for children
or pregnant women because it is not likely that these populations would
be subject to the primary surgical procedures of total knee replacement
or hip replacement. We determined that evidence-based guidelines
available support the reasonable preventability of DVT/PE in most
cases, however, the related prevention protocols have not been proven
appropriate for application in children and pregnant women. Therefore,
we are not identifying the Medicare HAC, DVT/PE as related to total
knee replacement, or hip replacement for pediatric or obstetric
populations under Medicaid's PPC policy. We have revised the final rule
to reflect this determination.
We remind commenters that the Medicare HACs serve as a baseline,
and that States electing to expand their policies to consider other
conditions associated with children and pediatric quality measures may
do so through the SPA process. We encourage States to collaborate both
with CMS and other States, as well as their provider communities and
stakeholders like CDC and AHRQ to implement informed policies
appropriate to their Medicaid populations. We will support State
efforts and cross-educate, through the State plan amendment process and
by providing information that we gather from States and other programs.
Comment: One commenter believed that the expansion of PPCs for
Medicaid under the proposed rule goes beyond any previous guidance
shared by CMS with the State during Affordable Care Act-related
conference calls.
Response: Discussions held with the States, stakeholder groups and
various provider communities regarding this policy were necessary to
determine existing State practices regarding non-payment for health
care-acquired conditions. They were informational for
[[Page 32822]]
CMS and did not in any way commit the Secretary to a particular policy
direction. They were also a first effort in allowing States without
existing policies to gather some general information from and network
with States with existing policies.
The final regulation incorporates conditions identified as
Medicare's HACs, with the exception of DVT/PE as related to total knee
replacement and total hip replacement for pediatric and obstetric
populations, and 3 NCDs as the minimum requirement for State PPC
nonpayment policies. The rule allows States the flexibility, if
desired, but does not require, States to identify additional conditions
as PPCs under their Medicaid programs. Additionally, States have
already begun to develop PPC-related non-payment policies and this rule
would allow that work to continue.
Comment: A few commenters believed that there was not sufficient
time to implement these provisions for providers that had not already
been subject to Medicare's policy, and were particularly concerned with
the implementation timeframes for reporting.
Response: We anticipate that States and providers, especially those
groups of providers that have not been subject to Medicare's HAC
policy, will need to work collaboratively to develop policies and
implement reporting systems that would complement existing payment
structures. We believe given the timeframes involved and the need for
States to provide guidance to providers, it would be appropriate to
delay compliance action on the provisions of the rule until July 1,
2012.
Comment: One commenter requested that we strike Sec. 447.26(c)(4)
because they believed the access requirements proposed there were
already reflected in 447.204 which requires that payment be sufficient
to assure beneficiary access. The commenter thought that any dual
interpretations could lead to unwarranted litigation risks.
Response: We thank the commenter for this comment. We have revised
the language at 447.26(c)(4) to clarify that, ``A State plan must
ensure that non-payment for provider-preventable conditions does not
prevent access to services for Medicaid beneficiaries.''
2. Conditions Identified and Providers Affected
Comment: Some commenters pointed out that Medicare's HAC policy
applies only to Medicare IPPS hospitals. These commenters believed that
CMS should limit Medicaid PPC payment restrictions to Medicaid
participating hospitals that are similar to Medicare IPPS hospitals.
Other commenters asked for clarification on this same point. Most of
these commenters also believed that we should limit States ability to
identify other PPCs, proposing that the set of Medicare's HACs and 3
NCDs be used as a ceiling instead of as a floor for Medicaid's PPC
policy.
Response: The Affordable Care Act requires that HACs identified
under the Medicare IPPS are applicable to all entities that operate as
Medicaid inpatient hospitals. We do not have the authority to exempt
any Medicaid inpatient hospital providers from these requirements.
States currently have the authority to extend PPC-related non-payment
policies to other conditions.
Comment: Some commenters objected to the entire category of OPPC
(affecting providers other than hospitals) included in the proposed
regulation. Commenters recommended that CMS consider and impose a
number of parameters related to States' implementation and selection of
the OPPC category.
Response: In preparing this regulation, the Statute required that
CMS consider existing State practices and determine whether, as a
matter of policy, it was appropriate to include those established
practices in these final regulations. We determined that, in some
instances, States had implemented provisions that applied to providers
in settings other than inpatient hospital settings, including
outpatient hospital settings. We did not believe that it was prudent to
require of all States what had been done in a few, but we wanted to
provide States the flexibility to do so. Accordingly, we designed the
PPC provisions to allow the expansion of State policies to other care
settings, and other conditions. In light of the differences between the
types of participating providers and the enrollee populations in
Medicare and Medicaid, we provided flexibility for States in the
identification and application of OPPCs. We anticipate that States will
consider arguments made by particular providers that these OPPCs should
be defined so that they do not apply to them. We believe this is the
appropriate forum for consideration of the unique circumstances of
particular providers.
Comment: Some commenters recommended that we consider the benefits
of and establish a nationally consistent set of conditions identifiable
as PPCs for Medicaid.
Response: We determined that the conditions identified as
Medicare's HACs, with the exception of DVT/PE as related to total knee
replacement and total hip replacement for pediatric and obstetric
populations, and 3 NCDs are appropriate to serve as the baseline for
Medicaid's PPC policy. We are strongly committed to permitting State
flexibility to innovate in this area. State innovation has been a
significant driver of Federal policy, and States have direct experience
with utilization and claims review with respect to Medicaid services.
Comment: Some commenters suggested that the initial set of
conditions be more limited and targeted, and that they be expanded
incrementally over time.
Response: Section 2702(b) of the Affordable Care Act defines the
term ``health care-acquired condition'' as ``a medical condition for
which an individual was diagnosed that could be identified by a
secondary diagnostic code described in section 1886(d)(4)(D)(iv) of the
Act.'' The provision also allows the Secretary to exclude conditions
not appropriate for application in Medicaid. As such, the final
regulation incorporates conditions identified as Medicare's HACs, with
the exception of DVT/PE as related to total knee replacement and total
hip replacement for pediatric and obstetric populations, and 3 NCDs.
Additionally, we believe that the flexibility provided States in
developing additional PPCs, beyond those established as the floor in
the final rule, allow for the type of incremental expansion of this
policy that the commenters suggest.
Comment: Other commenters recommended that Medicaid PPCs focus on
conditions specific to the Medicaid population. A few commenters
offered that it would be ideal for CMS to evaluate other Medicaid
specific conditions that would apply specifically to pregnant women or
children.
Response: We believe that the flexibility provided States in the
final rule will facilitate the development of additional Medicaid
specific conditions to be identified for nonpayment. Some State
Medicaid programs with existing policies have identified conditions
specific to certain populations like Obstetrical Hemorrhage with
Transfusion, which is a condition specific to pregnant women. We
encourage States to follow CMS's example in identifying conditions by
working with provider communities and industry partners.
Comment: A few commenters suggested that CMS coordinate Federal
PPCs policies across agencies and with other organizations developing
quality measures specific to Medicaid populations.
Response: We are actively working to coordinate with other health
reform initiatives such as the pediatric core quality measures,
accountable care
[[Page 32823]]
organizations, and health insurance exchanges to develop coordinated
Federal policy in the area of Health System Quality. We continue to
collaborate with States, providers, and other stakeholders to inform
policy decisions related to this area.
Comment: Some commenters stated that any extension of PPC beyond
the hospital setting was premature, and emphasized that application of
PPC to other providers was not feasible because of the different
patient populations, payment structures and conditions that applied in
different environments. These commenters stated unique issues in
various provider settings including long-term care settings, dialysis
clinics, and skilled nursing facilities.
Response: We disagree with the point that the PPC provisions should
be limited to the hospital environment. This rule requires that States
adopt minimum requirements for each category of PPC. States have the
flexibility to identify additional OPPCs if desired, but there is no
requirement to do so. Many States have already identified conditions
beyond the minimum requirements in this final rule. We understand
clearly that the category of OPPCs would allow expansion beyond the
hospital environment and must be done in close consultation with
affected providers and limited to situations where a State has made a
finding that the condition could reasonably have been prevented in
ordinary cases. We have revised regulatory text to make clear that
these are State determinations that must be made based on State
findings that the condition is reasonably preventable using procedures
supported by evidence-based guidelines. The identification of PPCs in
settings other than the hospital setting makes sense because, from the
perspective of the patient, it matters very little whether a wrong site
surgery occurred in a hospital, an ambulatory surgery center, or in a
minor surgery done in the physician's office. Moreover, States have
already gone beyond the hospital setting in their individual PPC
policies. All that this Federal regulation adds is the HCAC category
which requires nonpayment for the full list of Medicare's HACs, with
the exception of Deep Vein Thrombosis/Pulmonary Embolism following
total knee replacement or hip replacement in pediatric and obstetric
patients and the OPPC category which requires the minimum mandatory
inclusion of what are now the three Medicare NCDs: Surgery on the wrong
patient, wrong surgery on a patient, and wrong site surgery. We are
simply replicating the mandatory provisions in the Medicare program,
and adding these to the existing State flexibility under Medicaid to
establish payment and quality standards.
We encourage States to collaborate both with CMS and other States,
as well as their provider communities and stakeholders like CDC and
AHRQ to implement informed policies appropriate to their Medicaid
populations. We will support State efforts and cross-educate, through
the SPA process and by providing information that we gather from States
and other programs.
Comment: A number of commenters requested that CMS clarify that the
HCAC category applies only to inpatient hospitals.
Response: This final rule has revised regulatory language to
clarify that the HCAC category applies to all inpatient hospital
settings under Medicaid. The OPPC category minimum requirements
(Medicare's 3 NCDs) are applicable in any healthcare service setting
where these events may occur.
Comment: One commenter expressed concern that expansion of PPC to
nonhospital providers threatened the access of Medicaid beneficiaries
to care. In particular, the commenter asked CMS to clarify that
Medicaid payment disallowance for PPC would not apply when the PPC was
present at the time the provider commenced treatment of the patient.
Response: The language in the proposed regulation was intended to
cover only situations where payment reduction was being applied to
treatment for a condition not present on admission or commencement of
treatment by that provider. However, we understand that clarifying the
language of the regulation to emphasize this point would be helpful and
have done so in this final regulation. New Sec. 447.26 (c)(2)
explicitly states that ``* * * no reduction in payment for a PPC will
be imposed on a provider when the condition defined as a PPC for a
particular patient existed prior to the initiation of treatment for
that patient by that provider.'' This was implied in the previous
language, but has now been made explicit. CMS agrees with the comment
and is providing this clarification.
CMS disagrees with the commenter's point that the expansion of
State PPC policies beyond the hospital environment will limit access.
We understand clearly that expansion beyond the hospital environment
must be done in close consultation with affected providers and limited
to situations where a provider could reasonably have prevented the PPC.
However, from the perspective of the patient, it matters very little
whether a wrong site surgery occurred in a hospital, an ambulatory
surgery center, or in a minor surgery done in the physician's office.
Moreover, as the commenter notes, States have already gone beyond the
hospital setting in their individual PPC policies.
Comment: One commenter requested that CMS provide States additional
guidance on applying the Medicare HAC criteria to Medicaid providers
and conditions. This commenter believed that we should partner with
States to have continued dialogue on evidence-based guidelines.
Response: As stated throughout the rule, we intend to continue
dialogue with States and other Agencies related to this issue.
3. PPC Terminology
Comment: A few commenters believed that the distinctions among the
terms in the proposed rule were confusing and made it difficult to
understand which term applied to which criteria.
Response: We have revised the regulatory text to clarify that PPCs
are clearly defined into two separate categories, HCACs (conditions
identified as Medicare's HACs (with the exception of DVT/PE following
total knee replacement or hip replacement in pediatric and obstetric
patients) for IPPS purposes, applied broadly to Medicaid inpatient
hospitals) and OPPCs (conditions applicable in any healthcare service
setting minimally defined as Medicare's 3 NCDs).
Comment: A few commenters objected to the use of the term PPC. One
proposed the use of the alternative term ``Preventable Healthcare
Related Conditions.'' The commenters noted that one proprietary
organization is currently utilizing the acronym PPC for ``Potentially
Preventable Conditions.''
The commenters also questioned our use of the term other provider
preventable condition and stated their biggest concern was with
creating a new term that encompassed 3 NCDs so closely related with the
NQF's ``Serious Reportable Events in Healthcare.'' The commenters
recommended that CMS not create explicit category titles under the PPC
umbrella term.
Response: As stated in the preamble, the designation of these terms
is necessary to a policy that meets statutory requirements in setting
Medicare's policy as the minimum and allowing States the flexibility to
expand beyond that minimum. We do not believe that the term PPC has
been
[[Page 32824]]
narrowly defined across the industry to include a specific set of
policy provisions as would be required by this final rule. In addition,
we do not believe that the use of the PPC acronym will infringe on any
proprietary organizations' ability to continue to use that acronym. We
have not made any revisions to this final rule to reflect this comment.
Comment: One commenter had questions regarding the definition of
OPPC. The commenter questioned which evidence-based guidelines would be
used and recommended that the regulation be expanded to include exact
definitions of the guidelines.
Response: It would be difficult to determine a singular set of
guidelines to be identified for the various conditions that States may
identify under these provisions. The rule provides States flexibility
in determining the conditions identified for nonpayment under their
individual State plans. As States submit plans for approval, we will
evaluate the conditions proposed by States and determine their
appropriateness for the Medicaid program. Additionally, we would remind
commenters that the Secretary has the authority to revisit these
provisions and may do so as this policy area develops. We reject the
commenters recommendation and have made no changes to the final
provisions regarding this issue.
Comment: Many commenters recommended that more research be done by
Medicare and Medicaid on applying PPC nonpayment policies to outpatient
settings before conditions that occur in those settings are
incorporated into PPC nonpayment policies or expanded. Some commenters
objected to the designation of the 3 NCDs as a baseline for the
Medicaid policy.
Response: Medicare is conducting additional research to inform its
policy on applying its HAC provisions beyond its IPPS hospitals. In
preparing this regulation, CMS was required to consider existing State
practices and determine whether, as a matter of policy, it was
appropriate to include those established practices in these final
regulations. We determined that, in some instances, States had
implemented provisions that applied to providers in settings other than
inpatient hospital settings, including outpatient hospital settings. We
did not believe that it was prudent to require of all States what had
been done in a few, but we wanted to provide States the flexibility to
do so. Accordingly, we designed the PPC provisions to allow the
expansion of State policies to other care settings, and other
conditions. We agree that States should do additional research to
evaluate the impact of applying nonpayment policies in outpatient
settings before adopting such policies. It should also be noted that
States with existing policies that do not meet the minimum provisions
of this final rule and those without existing policies will need to
submit for CMS approval SPAs implementing these policies.
The three events that we are requiring that States include in their
OPPC are those events which already trigger payment reductions in the
Medicare program as national coverage determinations (NCDs). In the
Medicare program, NCDs are already applied to all providers, not just
to specified hospitals. Medicare NCDs are detailed, evidence-based
determinations that are supported by substantial data. Therefore,
inclusion of these three events merely replicates evidence-based
determinations that are already in effect in the Medicare program.
Comment: One commenter stated that the expansion of State PPC
policies into non-inpatient settings will be extremely difficult to
implement due to the very characteristics that are inherent to the
outpatient setting, such as: The types of care and services provided;
numerous providers and provider-types involved in care; periodic
episodes of care provided by numerous providers over lengthy periods of
time; and lack of systems and infrastructure to adequately coordinate
care between visits and providers, among others. The wide variety of
payment systems create enormous challenges for provider reporting,
according to this commenter.
Response: We are encouraging States to work with provider
communities and other stakeholders to carefully examine nonpayment
policies in non-inpatient settings. Additionally, we are requiring that
States submit for approval Medicaid State plan amendments that would
implement PPC nonpayment policies. To support these Medicaid State plan
amendments, we are clarifying that the State must have made findings
that the proposed PPC is reasonably preventable through the application
of evidence-based guidelines. The SPA review process will give CMS and
providers the opportunity to consider State policy before it is
implemented and to provide guidance and input based on our knowledge of
the issues.
4. POA and Coding Systems
Comment: Several commenters objected to the burden of creating a
POA system and the potential for variation in the different State PPC
policies. Commenters are concerned that the POA requirement and its
impact on reimbursement may result in extraneous testing, delayed care,
and further access issues for Medicaid patients. In emergency
situations, it is often impossible to provide optimal patient care and
simultaneously determine POA status, it was noted. One commenter also
noted that many hospitals were not familiar with the intricacies of POA
coding and would require CMS guidance and time to implement it.
Response: The POA system is not required by this final regulation,
but obviously providers will need to carefully document the physical
status of their patients on admission. That documentation is not simply
done for legal purposes, but serves the legitimate medical purpose of
allowing for careful evaluation the patient's condition prior to
treatment and communicating that information to members of the
treatment team. Ultimately, the provider will self-report PPCs to the
State. The State may choose to verify this by a POA system or by other
methods.
Comment: One commenter disagreed that relying on record review with
the ``Global Trigger Tool'' to detect what is present on admission will
be effective in detecting POA. The commenter requested clarification on
the method and asserted that it is not CMS's responsibility to
determine POA retrospectively. The commenter opined that since CMS is
not the patient's care provider, this would be bureaucratic over-reach
into the patient-provider relationship.
Response: We agree with the commenter that it is not CMS's
responsibility to determine the POA status of a patient. The ``Global
Trigger Tool'' is a tool by which providers would use a series of
``triggers'' to determine the possible occurrence of an adverse event
and indicate further review of a particular case. Neither the proposed
rule, nor this final rule include any requirement that a provider
implement the use of the ``Global Trigger Tool.'' We do suggest that
our research indicates that this tool may be useful in identifying the
occurrence of PPCs, as well as others like nursing reviews or
concurrent utilization reviews.
Comment: One State commented that the POA indicator is a very
useful resource to identify the specific hospital where an adverse
event occurred.
Response: We thank the commenter for this information.
Comment: One commenter was concerned with the use of the POA
indicator being applied to pediatric populations because it may be hard
to determine whether a child entered an emergency department with an
[[Page 32825]]
asymptomatic yet incubating infection. This commenter recommended a
study be done to determine whether the incubation period in a child is
different from an adult because the information would influence the
determination of POA in certain cases.
Response: The POA system is not required by this final regulation,
but obviously providers will need to carefully document the physical
status of their patients on admission. That documentation is not simply
done for legal purposes, but serves the legitimate medical purpose of
allowing for careful evaluation the patient's condition prior to
treatment and communicating that information to members of the
treatment team. Ultimately, the provider will self-report PPCs to the
State. The State may choose to verify this by a POA system or by other
methods.
In regard to the study of the incubation period of infections in
children versus adults, the purpose of this rule is to deny Medicaid
payment for PPCs. States will be required to submit SPAs to implement
these policies, however, aside from the minimum requirements in the
rule States have flexibility in determining how to implement the
related provisions, including the conditions identified for nonpayment.
That being said, we recognize the inherent differences between the
Medicare and Medicaid populations and would note that a major
consideration for allowing States such flexibility in the OPPC category
is the idea that States will be able to work with their provider
communities and industry partners to further consider the unique
situation of Medicaid beneficiaries within each State. We realize that
for children's hospitals and pediatric populations there are a number
of conditions that could be otherwise identified. We believe that
States, working with their provider communities, are in a better
position to develop additional conditions specific to their Medicaid
populations and programs. We continue to believe that innovations
should be shared across programs and States. As information becomes
available, we will share implementation examples with States. We also
encourage States to collaborate in this policy area.
Comment: One commenter recommends that States consistently adopt
the ICD-9-CM and ICD-10-CM codes as the only diagnostic standard for
identifying conditions for purposes of Medicaid payment. According to
this commenter, it would be administratively burdensome for providers,
as well as result in lack of data comparability across Medicare and
Medicaid programs, to allow Medicaid programs to use alternative coding
systems or their own method for identifying each PPC.
Response: We agree that the ICD-9-CM and ICD-10-CM codes present a
reasonable alternative to developing and implementing unique diagnostic
codes for the purposes of this provision. We encourage States to
explore the use of the ICD-9-CM and ICD-10-CM codes for purposes of
identifying PPCs under their existing programs.
Comment: One commenter expressed concern over identifying
additional costs associated with an adverse event that occurs in a same
day surgery center, a skilled nursing facility or a clinic. The
commenter reported that it would be very difficult to identify the
clinic or facility as the cause of the adverse event because they are
not reimbursed through a DRG payment system. The commenter notes that
its claims system would not isolate claim lines related to the adverse
event to distinguish them from appropriate services.
Response: We appreciate the response. We understand the difficulty
that States may face in applying this policy in settings other than
inpatient hospital settings, but note that some States have managed to
apply these policies quite broadly and successful quality outcomes have
resulted. We encourage States to evaluate their populations and work
with their provider communities to explore the possibilities of
expanding PPC policies to non-inpatient hospital settings to support
States efforts to improve the quality of care in their overall health
systems.
Comment: One State with hospitals exempt from Medicare IPPS payment
under 1814(b)(3) of the Act noted that its existing PPC policy, which
started in 2008, has resulted in a 12 percent decrease in measured
hospital complication rates with associated cost reductions of $62
million which were subsequently redistributed within hospitals in that
State. The State praised CMS for allowing State flexibility in
developing PPC policy and outlined planned State initiatives in
reducing preventable readmissions. This State also noted that since its
policy is considerably expansive, it should be exempted from this final
rule.
Response: We do not have legal authority to exempt any State from
the statutorily required provisions. We disagree with the suggestion
that a States existing policy should exempt a State from the
requirements of this final rule. The provisions of the final rule are
drafted to allow States flexibility in developing individual PPC
policies, while adhering to the minimum requirements set forth. While
we appreciate the innovative nature of State programs, we believe that
it is necessary for all States to appropriately amend their Medicaid
State plans to comply with Federal law. This will also enable other
States to learn and be better informed.
We also believe that this comment illustrates the value of the
Federal-State partnership in Medicaid. Many of the ideas used in this
regulation were originally developed by State Medicaid programs
interested in improving the quality of care received by their Medicaid
beneficiaries. States, like other stakeholders in the Medicaid system,
share a common interest in the development of safe, efficient Medicaid
systems which serve their beneficiaries. A common goal for CMS, States,
providers and patients is the pursuit of better outcomes for
individuals and populations, while reducing unsustainable costs through
improved quality of care. The pursuit of this common goal strengthens
not only Medicaid, but the entire American health care system.
Comment: Some commenters were strongly supportive of the approach
taken by the proposed regulation. The commenters endorsed the use of
the Medicare HAC as Medicaid HCAC and the provision of flexibility to
States through the SPA process. In particular, one group favored the
preservation of State ability to define PPC which occurred outside of
hospitals and the three federally required OPPC. This commenter
stressed the value of required State reporting systems and suggested
public posting of such data after appropriate risk-adjustment and data
validation. The comment also noted the importance of CMS monitoring to
assure that the PPC policy had no adverse effects on beneficiary access
to care.
Response: We appreciate the commenters' support. We will monitor
the implementation of the final rule to assure that beneficiary access
to care is not impaired.
5. General Comments
Comment: One commenter believes that the proposed rule is
inconsistent because it states that hospitals will need additional
infection control staff to prevent or reduce PPCs and that hospitals
already have programs in place. The commenter also asks for
clarification on whether the implementation cost estimates are academic
or provided by hospitals.
Response: The commenter is taking these two points out of context.
In the
[[Page 32826]]
preamble to the proposed rule in discussing options considered for
reporting requirements we say, ``We considered requiring reporting to
Hospital Compare and the National Health Safety Network, but decided
against these formats because: We do not believe they currently have
the capacity to allow State specific reporting of varied measures;
their existing collections may not be consistent with what most States
are currently requiring providers report; and the reporting formats may
impose undue significant burden for providers--particularly those that
do not have full-time quality staffs or resources.'' Later in the
proposed rule where we discuss the regulatory impact analysis we state,
``The Joint Commission requires hospitals to have established programs
for Quality Improvement, Risk Management, Safety, and Infection
Control. As a result, a majority of hospitals already have in place
programs to avert Medicare HACs and thus would not incur new costs to
implement parallel programs to avert Medicaid HACs.'' There are
hospitals that have existing programs. There are also hospitals that
will need to use additional resources to meet State requirements. This
will be determined by each individual hospital depending upon its
existing resources. The estimates are based on our experience with the
implementation of like provisions through the SPA process, as well as
Medicare's experience implementing its HAC policy.
Comment: Commenters were concerned that States would be too
expansive in defining outpatient PPCs and noted that, in the outpatient
area, there is limited provider control and patient compliance issues
are essential.
Another commenter expressed concern that the provisions would allow
States to identify conditions not based on accepted medical standards.
It noted that, in its State, the automated Medicaid claims system used
by Medicaid health plans had limited ability to report out or adjust
for PPCs. The commenter was critical of the short timeline for
compliance and expressed concern that, in the dual eligible category,
there was a possibility of double payment reduction.
Response: We note that an OPPC must be supported by a finding by
the State that it ``could have reasonably been prevented through the
application of evidence-based guidelines.'' To address this comment, we
have strengthened this language to require that the finding be based on
a review of medical literature by qualified professionals. As a result,
States PPCs will not be able to identify a PPC without a strong basis
to do so, and we do not anticipate great variation between States over
time.
We are requiring that the providers self-report PPCs, at which time
the health plan or State can, upon receipt of the self-report, make an
appropriate payment correction. We believe that, once providers have
put in place systems to track and report PPCs, they will be able to use
this information to reasonably reduce the incidence of these defined
events in their facilities. For dual eligibles, the intent of this rule
is that no payment would be available under either Medicare's IPPS or
Medicaid for an identified HAC. We do not view this as a ``double
payment reduction'' but as a consistent nonpayment policy. State
Medicaid agencies have repeatedly expressed to CMS their concern that,
with dual eligibles, the impact of a Medicare HAC denial was often that
the provider would simply bill Medicaid as a secondary payer. This
would result in no denial of payment even when a Medicare HAC occurred.
Indeed, that complaint from State Medicaid agencies is one of the
reasons that, in this regulation, we are attempting to coordinate
Medicare and Medicaid policies.
Comment: Several commenters suggested that we develop a set of
standard definitions that account for provider setting and other
evidence-based factors that can be applied across health care settings
and across State lines. Some also suggested that we remove the option
providing States the ability to include any HCACs or OPPCs beyond those
required by Medicare to encourage State-to-State uniformity.
Response: Medicaid is a State-administered program. By setting
Medicare's hospital IPPS HAC policy as the base policy, we are
encouraging uniformity across the two programs while simultaneously
allowing States to retain the flexibility that is statutorily-afforded
to them under title XIX of the Act.
Comment: One commenter questioned what would prevent hospitals from
spreading the cost of nonpayment for PPCs out among all health care
consumers. The commenter suggested that CMS institute an incentive
system by implementing a pre-paid provider incentive pool rather than a
nonpayment system.
Response: The purpose of this regulation is to establish rules that
would prevent Medicaid from paying for HCACs resulting from provider
error and to encourage quality-based reimbursement. Hospitals will
continue to be paid for the services provided. If a patient enters the
facility for a surgical procedure and in the process of that procedure
a HCAC occurs, the hospital will receive payment for the initial
surgical procedure but will not receive payment for services provided
in addressing the HCAC. That being said, this final rule sets out broad
parameters for allowing States to design PPC policies that complement
their current systems. If a State is able to develop a system that
complies with the requirements of this final rule through an incentive
based program, we welcome the opportunity to review it as part of a SPA
and share it with other States as appropriate.
Comment: Some commenters asked CMS to provide in the final rules
specific guidance to States regarding the inclusion of additional
preventable conditions; for example, issue specific, evidence-based
parameters for defining ``preventable'' with consideration for issues
like patient noncompliance. Other commenters provided specific
conditions that they did not believe States should identify for
nonpayment in their PPC policies. The commenters had various reasons
for objecting to States' inclusion of these conditions based on patient
population, facility type, and administrative burden.
Response: The final rule does not require that States include other
provider preventable conditions, but provides States with the option to
do so. By allowing States to develop these programs through State plan
amendments with the participation of the provider community, we believe
that concerns such as this will be addressed at the State level.
Comment: One commenter highlights the fact the PPCs program's
impact on States includes the administrative and financial burden of
building and maintaining data collection systems, not to mention the
reality that State Medicaid programs are run by public administrators
who may not have training or experience in clinical issues, comparative
effectiveness research, and other factors that are critical when making
payment restriction decisions.
Response: We agree that States may need to employ additional
resources to implement a PPC policy, just as with any other payment
policy implemented by States. The minimum requirements under this final
rule are designed to minimize the administrative burden on all
stakeholders. The PPC policy is designed to use existing data systems
to identify conditions as they occur. We encourage States and providers
to work together to craft comprehensive PPC nonpayment and reporting
policies that are reasonable and effective.
[[Page 32827]]
Comment: One commenter noted that payment reductions for those
hospitals that have a high burden of Medicaid and Medicare patients
will challenge their ability to stay open at current capacity if they
suffer significant payment reductions due to the new rule. Critical
access hospitals may be the most vulnerable due to the lack of
infrastructure to analyze their own data and develop corrective actions
prior to the actual payment reductions, according to the commenter.
Response: Hospitals will continue to be paid for the provision of
high quality care under the final rule. The Affordable Care Act
requires that HACs identified under Medicare IPPS rules are applicable
to all entities that operate as Medicaid inpatient hospitals. We do not
have the authority to exempt any Medicaid inpatient hospital providers
from these requirements.
Comment: One commenter noted that under Medicare, the cost savings
seems relatively low as it pertains to all of the HACs, which is the
baseline for this policy under Medicaid. According to this commenter,
there is very little data to suggest that the savings under Medicaid
would be greater even if the OPPCs are included. The commenter
recommend that CMS take a slower approach to broadening the HCAC policy
by expanding from the Medicare HACs over a longer period of time to
evaluate the savings from nonpayment for HCACs under the Medicaid
program.
Response: The purpose of this regulation is to drive quality care,
it is not a cost savings exercise. We recognize there may be some cost
savings and that it may take some time to realize the full extent of
the cost savings, but this measure is important for the long-term
benefit of the Medicaid program, Medicaid beneficiaries, and the health
care industry as a whole. We intend for these provisions to be a
catalyst for change where the infrastructure for quality measurement,
as well as the methods for improvement that should be built into our
system, are not currently in place.
Comment: One commenter wrote to share its success in quality
improvement within a particular State. The commenter reported various
collaborations that it has undertaken with its State and other
stakeholder organizations resulting in delivery system innovations have
proven valuable and efficient.
Response: We appreciate this comment and commend the commenter for
taking the necessary steps to improve care to its beneficiaries. We
encourage other States and organizations to innovate in the same way.
Comment: One commenter recommended that national clinical consensus
should be a component of the criterion as to whether a condition is
``reasonably preventable.''
Response: We agree that a finding as to whether a condition is
``reasonably preventable.'' must be based on a solid basis in national
medical literature, as determined by qualified professionals.
Therefore, we are retaining and strengthening the portion of the OPPC
definition from the proposed rule that requires that conditions
identified by States must be supported by a finding that the
conditions, ``could have reasonably been prevented through evidence-
based guidelines.'' We are adding that this State finding must be based
upon a review of medical literature by qualified professionals. We
believe that this stronger language will ensure a level of integrity
and consistency in these determinations.
Comment: One commenter believed that Medicare has determined and
will continue to determine, with the help of evidence-based guidelines,
what is reasonably preventable and what are ``never events,'' and that
this should be the standard across all regions of the country because
there would not be any benefit to the population of beneficiaries for
one state to have different quality health standards including for
payment consideration.
Response: The work that Medicare has done in the process of
developing its IPPS HAC policy is valuable and consistent. Adopting
this work on a national level will benefit States and beneficiaries.
This is part of the reason the final regulation incorporates conditions
identified as Medicare's HACs, with the exception of DVT/PE as related
to total knee replacement and total hip replacement for pediatric and
obstetric populations, and 3 NCDs as the foundation of the Medicaid
policy to be applied in States.
Comment: One commenter believed, in regard to flexibility as to the
grouper that each State selects to use to process HCAC, that to achieve
consistency there needs to be limits placed on the choice. Also, States
need to be using the current HIPAA administrative code set versions
that Medicare uses. This commenter also supported the standardization
of public domain groupers to help reduce the cost to healthcare
providers and States.
Response: States have great flexibility in designing their own
payment systems and working with their provider communities in
determining how best to implement these provisions. We do not intend to
restrict that flexibility with this final rule. We note that not all
States reimburse providers using grouper methodologies. In regard to
the adoption of the standardization of public domain groupers, we
appreciate this comment, but it is outside the scope of this rule.
Comment: Many commenters recommended that we revise Medicare's HAC
list to include or eliminate various conditions.
Response: We thank the commenters for their input. However,
revisions to Medicare's IPPS HAC list are outside the scope of this
rule.
Comment: Some commenters wrote requesting clarification of or on
the application of Medicare's HAC list.
Response: The commenters' requests are outside the scope of this
rule. We refer the commenter to the Medicare HAC page located at http://www.cms.gov/HospitalAcqCond/02_Statute_Regulations_Program_Instructions.asp#TopOfPage.
6. State Plan Amendments
Comment: One State noted that the preamble (see 76 FR 9289)
proposes that States would be required to amend their Medicaid State
plans to match any changes to Medicare's final IPPS rule that Medicare
publishes 60 days prior to the beginning of the next Federal fiscal
year. The State commented that 60 days does not allow enough time to
identify ways to capture the data and program and test changes to the
payment system. The State suggested that CMS clarify that a State could
comply by the submission of a State plan amendment by the end of the
Federal quarter in which the change takes effect, that is, by the end
of the first quarter of the next Federal fiscal year.
Response: The Medicaid SPA process requires that States submit
amendments to their Medicaid plans no later than the last day of the
quarter in which the amendment would take effect. We have developed a
State plan preprint that outlines the minimum provisions of this final
rule and allows States the flexibility to identify OPPCs for nonpayment
in their Medicaid State plans. States will define the related payment
methodologies within the appropriate sections of their Medicaid State
plans.
7. Reporting Requirements
Comment: One commenter recommended that reporting requirements be
included in States' provider policies and included in provider
contracts.
Response: As discussed in the proposed rule, a reporting component
is
[[Page 32828]]
essential to building an effective PPCs policy for a number of reasons,
including State and CMS ability to capture data related to these
occurrences. We believe that States will need to work with their
provider communities to implement an appropriate reporting system.
Comment: One commenter supports the requirement that existing
claims systems be used as a platform for provider self-reporting
because it is essential that their nonpayment policies are based on
data provided through their claims systems.
Response: We thank the commenter for support on this issue.
Comment: One commenter remarked that provider self-reporting
procedures should require providers to report conditions identified for
nonpayment when they occur, regardless of the provider's intention to
bill. Hospitals and providers have a clear incentive not to report
quality errors beyond nonpayment provisions, according to the
commenter. CMS must take a strong stance against underreporting and
apply strict penalties. Another commenter requested that CMS clarify
that States would be required to submit provider self-reporting data to
CMS.
Response: In Medicaid, States are given a large degree of
flexibility under title XIX of the Act. As such, providers submit
Medicaid claims to States and not CMS. While we are requiring that
States implement self-reporting requirements, States have the ability
under the statute to determine how they will implement these
requirements with input from the provider communities. Once data is
collected at the State level, States will submit that data to CMS as
part of their standard procedure for collecting and sharing Medicaid
provider claims data.
Comment: Several commenters supported provisions in the proposed
rule that would require States to implement provider self-reporting
requirements through the claims submission processes.
Response: We agree and have retained these provisions in the final
rule.
Comment: A few commenters believe that providers will be over
burdened with the reporting requirements under this new regulation.
Additionally, they disagreed with how long it would take States to
develop and implement reporting requirements.
Response: The provisions of this final rule require reporting
through State claims systems because they are existing resources that
are routinely and regularly modified to accept State payment
adjustments for other provisions. Most providers subject to the minimum
requirements of the final provisions will be familiar with when and how
to report these conditions. In States with existing policies, there are
already these types of reporting requirements for payment purposes.
And, States electing to go beyond the minimum requirements of these
provisions will need to work with their provider communities to ensure
that all aspects of the provisions can be sufficiently implemented.
Provider reporting is necessary to ensure that the payment preclusion
is effective in eliminating PPCs, or determine whether additional
measures may be required, or whether the measures applied are
necessary.
Comment: One commenter requested clarification on the purpose of
provider reporting and how CMS expects States to use reported
information. Another commenter noted that there is no clear provision
on how States are to report this data to CMS. One State asks whether
the SPA will have to specify how the reporting will be done, or if
States will need to assure that they will comply with the requirement.
Response: We are requiring that States impose provider self-
reporting through claims systems because that information will be used
to determine when a PPC occurred and trigger State payment action. The
data will also be fed by States to CMS. CMS and States will use this
data to inform policy making.
Comment: One commenter noted that the proposed rule requires States
to establish a provider reporting requirement for PPCs. The commenter
asked what the parameters will be for those guidelines and how much
latitude CMS will give to the States.
Response: As a requirement of the final rule, States will implement
the provider self-reporting through payment claims systems regardless
of the provider's intention to bill. We are working to ensure that
States consistently report at least the minimum requirements of the
rule through the Medicaid Management Information Systems (MMIS). We
anticipate that States and providers, especially those groups of
providers that have not been subject to Medicare's HAC policy, will
need to work cooperatively to develop and implement reporting systems
that would complement existing payment structures. As discussed in the
proposed rule, a reporting component is essential to building an
effective PPCs policy for a number of reasons, including State and CMS
ability to capture data related to these occurrences.
8. Medicare and Medicaid Dual Eligibles
Comment: One commenter supports nonpayment for all PPCs as they
pertain to the dual eligible population. This commenter urges CMS to
codify provisions that prohibit Medicaid claim payment for claims that
have been denied by Medicare based on the presence of a HAC.
Response: We agree. This is a significant area of concern, and we
have revised the final regulation to reflect that no FFP is available
for a Medicare denied claim based on the presence of a HAC, ``A State
plan must provide that no medical assistance will be paid for
`provider-preventable conditions' as defined in this section; and as
applicable for individuals dually eligible for both the Medicare and
Medicaid programs.''
Comment: Some commenters requested clarification on how these
provisions would apply to Medicare cross over claims. Commenters wanted
clarification on how to determine that Medicare has rejected a HAC
claim for an individual dually eligible for Medicare and Medicaid.
Response: We agree that the proposed provisions lacked clarity in
the application to individuals dually eligible for Medicare and
Medicaid. We have revised the final rule to provide clarification.
States may determine that Medicare has reduced payment based on the
provisions of its HAC policy by working with their Medicare Fiscal
Intermediary to identify the appropriate codes related to treatment for
dually eligible individuals. Reference materials regarding POA coding
for Medicare HACs may be found at https://www.cms.gov/HospitalAcqCond/05_Coding.asp#TopOfPage
To support State efforts, we will work with the Federal Coordinated
Health Care Office to provide guidance on this issue.
9. Managed Care
Comment: One commenter wrote in support of the provision requiring
States to modify their managed care contracts to reflect the PPCs
payment adjustment.
Response: We agree and are retaining requirements that States
include PPC payment restrictions in managed care contracts. All
providers should be held to these quality standards and the final rule
retains these requirements.
Comment: One commenter requested clarification of the expectation
for MCOs to refund money derived from the nonpayment of PPCs back to
States.
Response: We anticipate that savings gained from the application of
State PPC policies to their managed care providers
[[Page 32829]]
will, ultimately, be factored into the individual contract rates
established with those providers.
Comment: One commenter requested clarification that the amendments
to Sec. 434.6 do not apply to MCOs, and further, that the MCO
contracts with providers will not have to require providers to report
PPCs associated with claims to the MCOs.
Response: On its own, the provisions of Sec. 434.6 do not apply to
MCOs; however, by cross-reference, we are applying the specific
provision in Sec. 434.6(a)(12) regarding PPCs to MCO contracts. We do
intend that MCO contracts with providers, identical to Medicaid State
agency's contracts with providers, require those providers to report
PPCs associated with claims to the MCO. Further, so that the Medicaid
State agency will be able to quantify and report, if necessary,
information on all PPCs in the Medicaid program, we expect that MCOs
will track PPC data and make it available to the State upon request.
Accordingly, we are modifying the proposed Sec. 438.6 to clarify both
intentions.
Comment: A few commenters requested that CMS provide guidance for
States on how to apply the nonpayment requirement for HCACs to
capitation payments, specifically those under Sec. 438.6.
Additionally, the commenters requested information on how these
policies would apply to the development of actuarially sound rates.
Response: We believe that the implementation of State PPCs policies
will be consistent with what we anticipate in the fee-for-service
setting and have only minimal impact on provider payment and therefore
the development of actuarially sound rates. However, as the MCOs spend
less money on services, that decrease will be reported to the State
which will in future rate-setting reflect the reduced expenditures in
the rate setting. States will need to work with their MCOs to develop
appropriate policies within their contracts.
Comment: One commenter recommended that CMS reinforce the
importance of State compliance with the requirement that Medicaid
managed care rate setting must be actuarially sound.
Response: The requirements of this final rule do not in any way
preempt regulatory provisions otherwise in effect. We urge States to
work with all of their provider communities to determine the best ways
in which to implement related nonpayment policies.
10. Comment Period
Comment: A few commenters objected to the 30-day comment period.
One commenter proposed that CMS issue a final rule with comment period
to accept additional public comment and to provide additional time for
States to articulate how they might comply with the regulations.
Response: This rule does not present a high level of complexity and
we believe that the 30-day comment period provided commenters
sufficient time to fully evaluate the proposed rule and submit comments
to CMS. The 30-day comment period is consistent with the requirements
of the Administrative Procedure Act codified at 5 U.S.C. 553, and a
longer period is not warranted in light of the significant beneficiary
protection that this rule would implement. For the same reasons, we do
not agree that issuing a final rule with comment period is necessary.
B. Access to Care
Section 2702(a) of the Affordable Care Act requires that the
Secretary ensure that adjustments to payment rates under this section
do not result in a loss of access to care for beneficiaries. To this
end, we proposed that any reduction in payment would be limited to the
amounts directly identifiable as related to the PPC and the resulting
treatment.
We received the following comments in response to our proposals
concerning access to care.
Comment: One commenter stated that hospitals should not be
penalized multiple times for the same occurrence.
Response: We agree and urge provider communities to engage States
to ensure that methodologies implemented do not unduly impact
providers.
Comment: Several commenters requested that we include a provider
appeals process in these provisions. The commenters noted that the
nature of identified conditions and the variation in State payment
policies warranted the inclusion.
Response: Existing State appeal processes may be available for a
provider to contest whether a State has improperly identified the
occurrence of a condition identified as a PPC. We encourage States to
develop appeals processes that will allow providers to object to any
payment reduction when the provider can show that an identified PPC
occurred despite all appropriate precaution.
Comment: Some commenters opined that allowing States any
flexibility in defining PPC through the OPPC category would be an undue
burden on providers who operate on a multistate basis.
Response: The underlying authority for this rule is found in
provisions of title XIX of the Act that predated section 2702 of the
Affordable Care Act. The proposed rule was supported by our existing
authority under sections 1102, 1902(a)(19), and 1902(a)(30) of the Act.
Providers that operate on a multistate basis must comply with the laws
and rules of each State in which they operate. We see no compelling
reason to limit State flexibility to identify PPC nonpayment rules to
ensure high quality services for beneficiaries.
Comment: One commenter opposed the idea of States being allowed to
define potential PPC and opined that this task was better left to
national quality organizations such as NQF or IOM. While expressing
support for the general concept of evidence-based quality standards,
the commenter believed that it was important that these standards be
national in scope and that the use of State Medicaid payment systems
was not the appropriate vehicle for improvement of health care quality.
Response: The Medicaid program, by its very nature, is a
partnership between the Federal and State governments, and is
administered by States. While we are requiring that States rely on a
review of medical literature by qualified professionals to identify
evidence-based PPCs, we believe it is essential to allow States
flexibility to develop payment strategies that provide strong
incentives for high quality services.
Comment: Several commenters recommended that we limit State ability
to create PPCs to only those which strictly met the Medicare criteria
in section 1886 (d)(4)(D)(iv) of the Act.
Response: Section 2702 of the Affordable Care Act requires that the
Secretary by rulemaking, establish a nonpayment policy for HCACs, the
underlying authority for this rule is found in provisions of title XIX
of the Act. The proposed rule was supported by our existing authority
under sections 1102, 1902(a)(19), and 1902(a)(30) of the Act and
States, using this authority, have already undertaken payment policies
to drive quality outcomes. We see no compelling reason to limit State
flexibility to identify PPC nonpayment rules to ensure high quality
services for beneficiaries.
Comment: One commenter was supportive of the proposed regulation
and of the addition of non-hospital providers through the OPPC
category. The commenter suggested careful CMS scrutiny of proposed
State PPC SPAs to assure no adverse impact on beneficiary access to
care, the addition of a risk-adjustment mechanism to the regulation,
careful monitoring to assure
[[Page 32830]]
that no access problems develop, and some mechanism to publicly report
provider outcomes. The Maryland Medicaid model for PPC payment and
reporting was offered as an exemplary model for national use.
Response: We reviewed the Maryland system in developing this
regulation and, found it to be a useful State model that combined both
financial incentives with overall quality improvement efforts. CMS will
review State preprints, reimbursement State plan amendments, and
supplementary information to determine final action on State PPC
policies.
Comment: Some commenters expressed concern that the proposed
regulation allowed too much discretion to individual States to use the
SPA process to affect payment in areas where no national consensus
about appropriate care existed.
Response: We are strongly committed to permitting State flexibility
to innovate in this area. State innovation has been a significant
driver of Federal policy, and States have direct experience with
utilization and claims review for Medicaid services. While we
anticipate that States will review data to identify evidence-based
PPCs, we believe it is essential to allow States flexibility to develop
payment strategies that provide strong incentives for high quality
services.
The SPA review process will give CMS and providers the opportunity
to consider State policy before it is implemented and to provide
guidance and input based on our knowledge of the issues.
Comment: Several commenters expressed concern that the language of
the proposed regulation allowed States excessive authority to use the
PPC process to further reduce Medicaid compensation during a period
when States are already under financial pressure to reduce Medicaid
costs. One commenter suggested numerous additional limitations of State
use of the PPC process be added to the final regulation.
Response: This final rule provides for nonpayment to the extent
that an identified PPC would otherwise result in an increase in payment
for additional services, and permits States to identify PPCs in
addition to the core PPCs that are based on Medicare. This is
consistent with the considerable flexibility that States have in
setting payment rates and methodologies. States will need to file SPAs
with CMS outlining the State's proposed nonpayment methodology, and
their approach to inclusion of Federal minimum standards, as well as
any additional variations proposed by the State. The SPA process will
allow the State's providers to file public comments on any proposed
State changes.
Comment: Several commenters expressed concern over how the
nonpayment policy would be implemented in States that do not use MS-DRG
reimbursement systems. A few commenters requested that States that have
elected to use per-diem, global payment, bundled payment or other non-
MS-DRG systems to reimburse hospitals be allowed to continue to do so,
and not be forced to move to MS-DRG.
Commenters were concerned that these States will need to identify
methods appropriate to their reimbursement mechanisms to make payment
reductions for PPCs and that resource-intensive post payment audits and
payment adjustments are likely to be necessary. These commenters noted
that they are encouraged by our attempt to provide flexibility to
States, but requested that we issue guidance that includes best
practice recommendations for developing efficient payment adjustments
where reimbursement is not based on an MS-DRG system. Another commenter
requested that we provide options for how States may identify or
estimate the cost of services on a systematic basis without a case by
case review. One commenter requested that we develop a crosswalk of
HCAC conditions to non-DRG payment methodologies to assure consistency
in reporting from States back to CMS. The commenter remarks that
encouraging States and MCOs to create their own crosswalks will be
counter-productive.
Response: CMS recognizes that many States do not use MS-DRG to
reimburse hospital providers. As stated in the NPRM, we have no
intention of requiring States to alter their current compensation
systems to comply with this final regulation beyond the necessary
adjustments needed to implement the PPCs non-payment provisions. This
intention continues through the final rule.
States have flexibility to design their own payment systems within
the guidelines of Federal regulations. The final rule allows States the
flexibility to implement nonpayment policies through various
mechanisms, but requires that States submit Medicaid SPAs setting forth
their mechanism to comply with the required nonpayment for PPCs, with
public notice for CMS approval. States will need to work with their
provider communities, industry partners, and CMS to determine the most
effective manner in which to implement these nonpayment provisions. As
we noted in the preamble to the proposed rule, we intend to continue to
gather and share information related to States' implementation of PPCs
nonpayment policies. However, we do not intend to endorse any
particular best practices.
We do not wish to limit State flexibility by dictating methods in
which PPCs should be translated or ``cross walked'' to individual State
payment systems. However, we do agree that there is a need for as much
consistency as possible in reporting from States to CMS. As a
requirement of the final rule, States will implement the provider self-
reporting through payment claims systems regardless of the provider's
intention to bill. We are working to ensure that States consistently
report at least the minimum requirements of the rule through the
Medicaid Management Information Systems (MMIS). We anticipate that
States and providers, especially those groups of providers that have
not been subject to Medicare's HAC policy, will need additional time to
develop and implement reporting systems that would complement existing
payment structures. As discussed in the proposed rule, a reporting
component is essential to building an effective PPC policy for a number
of reasons, including State and CMS ability to capture data related to
these occurrences.
Comment: A few commenters believed that it is unjust to penalize
providers for complications that occur despite best evidence-based
efforts to eliminate or avoid them. Commenters noted that some
conditions have more to do with patient risk factors or patient
compliance than with quality of care. Another commenter stated that not
covering these conditions would encourage denial of care to high risk
patient or a mass exodus of providers. Several commenters suggested
that appeals processes be included in State Medicaid PPCs provisions
that would allow providers to challenge payment denials.
Response: We agree that not all of the identified events will be
avoidable in 100 percent of the cases even with appropriate
precautions. But current Medicaid payment systems are designed to
provide incentives to providers to efficiently provide high quality
care and result in an aggregate payment that may be more or less than
actual costs in a particular case. For example, payment is often based
on a fee schedule or diagnosis related group methodology that considers
average or target costs of the particular service or services and may
differ from actual costs in a
[[Page 32831]]
particular case. Even ``reasonable cost'' rates do not necessarily
include all costs a provider may incur. It is important to remember
that the identified conditions have been determined through evidence-
based medicine to be provider preventable. For the issue of appeal
rights, existing State appeal processes may be available for a provider
to contest whether a State has improperly identified the occurrence of
a condition identified as a PPC. We encourage States to develop appeals
processes that will allow providers to object to any payment reduction
when the provider can show that an identified PPC occurred despite all
appropriate precaution.
Comment: One commenter suggested, as an example, that we consider
permitting Medicaid coordinated care plans to adopt inpatient
concurrent review as a practice for addressing PPCs. The commenter
noted that, ``most Medicaid coordinated care plans utilize inpatient
concurrent review as a unique reimbursement practice for addressing
PPCs. Most Medicaid coordinated care plans utilize inpatient concurrent
review to identify hospital days that are not medically necessary or
represent delays in care. These days are generally not eligible for
reimbursement in a non-DRG/per-diem environment. Expanding the
concurrent review process to include identification of hospital days
required solely for the treatment of PPCs would be one way to address
this issue.''
Response: This is one example of how States may be able to identify
amounts related to the treatment of PPCs. The final rule indicates that
States may reduce payments to providers when the PPC would otherwise
result in an increase in payment. The rule also requires that the State
be able to reasonably isolate for nonpayment the portion of payment
directly related to treatment for, and related to, the PPC. The rule
does not limit State flexibility in accomplishing these requirements.
Comment: One commenter asked that we clarify that it recognizes
that different reimbursement methodologies may result in no reduction
or different reductions than the reductions under MS-DRGs. Another
commenter asked that we confirm that, ``if on the same inpatient
hospital day, both services associated with a PPC and services not
associated with a PPC are rendered and if payment is made on a per diem
basis such that the presence of the PPC services would not result in an
increased per diem payment even without this proposed regulation, then
no adjustment to the payment for that day is necessary.''
Response: We agree that given the variations in Medicaid payment
methodologies and systems across States, there may be differences in
amounts identified for nonpayment based on the payment system employed
by the individual State. And there is no requirement that State
Medicaid payment adjustments to providers correlate specifically to
Medicare's payment adjustments for those same conditions. Payment
methodologies are extremely complex, and we do not believe it is
productive to address broad hypothetical scenarios regarding
implementation of nonpayment policies. We intend to work with each
State to develop implementation strategies that make sense with its
particular payment methodologies.
Comment: Some commenters recommended that risk-adjustment be
incorporated into PPCs policies.
Response: These comments appear to refer to payment methodologies
that provide for case-mix adjustments to give higher payments to
providers that treat sicker populations, to reflect the higher cost of
treating such populations. Such methodologies are not related to the
policies relating to PPCs that are reflected in this rule, and to
combine the two would significantly weaken the incentives for providers
to institute preventive measures to eliminate PPCs. We note that we
strongly support the incorporation of risk-adjustment in State Medicaid
programs, which States can elect under current law. We are urging
provider communities to continue to work with States to develop
successful risk-adjustment approaches on the State level.
Comment: One commenter suggested that hospitals which serve
Medicare and Medicaid beneficiaries will decrease in quality as a
result of the proposed policy because the fixed costs associated with
providing medical services will become variable, and instead of
absorbing the loss, investors will simply reduce capital investments.
The commenter offers that one solution to this possible undesired
consequence is to have the Medicaid and Medicare programs absorb such
costs, albeit not through direct payments. Instead, the commenter
suggested CMS could pay a flat rate at the beginning of the year
covering all PPCs and require them to be fully serviced without charge.
This way, they will still have the incentive to reduce HCACs but will
not have to bear the costs.
Response: The policy set forth in this rule is designed to improve
quality of services by providing a strong incentive for providers to
take steps eliminate the incidence of preventable conditions. A
provider that does so will suffer no economic loss. In contrast, the
flat rate payment approach proposed by the commenter would lock in a
tolerance level for such conditions, instead of eliminating them, and
would send a mixed message to providers about whether providers must
take steps to eliminate preventable conditions.
C. Effective Date of the Final Provisions
Consistent with the provisions of section 2702(a) of the Affordable
Care Act, we proposed to make these requirements effective July 1,
2011. In the proposed rule, we requested that States submit conforming
SPAs to implement these provisions prior to that date. To be in
compliance with the July 1, 2011 effective date, under Sec. 430.20, we
proposed that the last date a SPA may be submitted is September 30,
2011, which is the last day of the quarter in which the amendment would
be effective.
We received the following comments in response to our proposals
concerning the effective date.
Comment: Several commenters expressed concern that the July 1, 2011
effective date of the rule does not leave sufficient time for
discussion of policy, implementation of required hospital changes, and
development of the appropriate systems for reporting. Additionally,
commenters suggested that States be permitted up to 60 days to
incorporate Medicare HACs as Medicare updates its list.
Response: We are statutorily-required to implement these
regulations effective July 1, 2011. We do believe, however, that States
may need additional time to work with providers to implement sound
policies and reporting mechanisms. We intend to delay compliance action
on these provisions until July 1, 2012.
We disagree that this final rule should provide States up to 60
days to incorporate additional Medicare HACs as Medicare's list
changes. The publication of Medicare's final IPPS rule is consistent
and published in ample time to allow States to incorporate HAC changes.
The Medicaid SPA process allows States sufficient time to propose and
incorporate any changes that Medicare may make to its HAC list
considering the timeframe in which Medicare publishes its final rule.
Comment: One commenter recommended that CMS not penalize States
that are not prepared to implement the proposed Medicaid nonpayment
policy or any future updates in a timely manner due to a vender not
modifying necessary software in a timely manner.
[[Page 32832]]
Response: States have great flexibility in administering their
programs. We urge States to work with their provider communities and
vendors to ensure that they meet the provisions of these rules in a
timely fashion.
D. Specific Revisions to Regulations Text
The provisions of the proposed rule would deny FFP for Medicaid
expenditures made for PPCs, including HCACs and OPPCs identified in the
State plan; and would ensure that related payment adjustments do not
limit beneficiary access to care. These provisions, as proposed, would
apply to payments as specified under States' approved Medicaid State
plans, effective no later than July 1, 2011. We proposed to modify the
regulations at 42 CFR parts 434, 438, and 447 following general
provider payment rules and preceding other provisions concerning
reductions in provider payments. In addition, to ensure that these
provisions apply to contracts that States use to provide Medicaid
benefits using a managed care delivery system, we proposed to modify
the regulations at 42 CFR part 438.
Currently, the general rules regarding Medicaid State plan payments
for Medicaid are provided at part 447 subpart A. We proposed to add a
new Sec. 447.26 to indicate that FFP will not be available for
expenditures made for PPCs. We have included in Sec. 447.26(a) a
statement of the basis and purpose for the regulation, and in Sec.
447.26(b), the definitions for the umbrella term PPCs, and the included
terms HCACs, and other PPCs. We proposed to establish Medicare as the
floor that all States must adopt, but allow flexibility for States to
move beyond the Medicare definitions and settings. As States' programs
evolve and they make additional requirements, we will require that
necessary SPAs be submitted for implementation purposes.
In Sec. 447.26(c), we proposed to set forth the general rule that
State plans must preclude payment to providers for PPCs, and that FFP
is not available for State expenditures for PPCs. To ensure beneficiary
access to care, we specified that any reductions may be limited to the
added cost resulting from the PPC.
In Sec. 447.26(d), we have included a provision that will require
States to require provider reporting of PPCs associated with Medicaid
claims, or with courses of treatment for Medicaid beneficiaries that
would otherwise be payable under Medicaid.
In addition to these changes in part 447, we proposed including a
requirement in Sec. 434.6(a)(12) for contracts for medical or
administrative services that contractors do not make payment for PPCs,
and require that providers comply with the reporting requirements in
Sec. 447.26(d) as a condition of receiving payment. Likewise, to
ensure that these provisions are included as required elements in
Medicaid managed care contracts, we proposed including a requirement in
Sec. 438.6(f)(2) that contracts must comply with both Sec.
434.6(a)(12) and Sec. 447.26.
We proposed these particular provisions because the information
gathered in preparation for issuing the proposed rule indicated the
need for a consistent authority under which States could implement PPC
nonpayment policies; a consistent approach to identifying conditions
for nonpayment; a streamlined terminology to indicate Medicaid HCAC
payment policies; State flexibility to implement provisions suitable to
their own systems; and a consistent provider reporting platform.
We received the following comments in response to our proposals to
revise the regulations text.
Comment: One commenter believed that the language of the proposed
regulation could be construed to limit payments even when the PPC
condition was present on admission or initiation of provider treatment.
Response: The language in the proposed regulation was intended to
cover only situations where payment reduction was being applied to
treatment for a condition not present on admission or commencement of
treatment by that provider. However, we understand that clarifying the
language of the regulation to emphasize this point would be helpful to
and we have done so in this final rule. New Sec. 447.26(c)(3) language
explicitly states that ``* * * no reduction in payment for a PPC will
be imposed on a provider when the condition defined as a PPC for a
particular patient existed prior to the initiation of treatment for
that patient by that provider.'' This was implied in the previous
language, but has now been made explicit. We agree with the comment and
are providing this clarification.
Comment: A number of commenters requested that CMS clarify that the
HCAC category applies only to inpatient hospitals.
Response: The final rule has revised regulatory language to clarify
that HCAC category applies to all Medicaid inpatient hospital settings.
Comment: One commenter expressed concern that expansion of PPC to
nonhospital providers threatened the access of Medicaid beneficiaries
to care. In particular, commenters asked CMS to clarify that Medicaid
payment disallowance for PPC would not apply when the PPC was present
at the time the provider commenced treatment of the patient.
Response: The language in the proposed regulation was intended to
cover only situations where payment reduction was being applied to
treatment for a condition not present on admission or commencement of
treatment by that provider. However, we understand that clarifying the
language of the regulation to emphasize this point would be helpful and
we have done so in this final rule. New Sec. 447.26(c)(2) language
explicitly states that ``* * * no reduction in payment for a PPC will
be imposed on a provider when the condition defined as a PPC for a
particular patient existed prior to the initiation of treatment for
that patient by that provider.'' This was implied in the previous
language, but has now been made explicit. CMS agrees with the comment
and is providing this clarification.
Comment: A few commenters believed that the distinctions among the
terms in the proposed rule were confusing and made it hard to
understand which term applied to which criteria.
Response: We have revised the regulatory text to make it clear that
provider preventable conditions are clearly defined into two separate
categories, healthcare acquired conditions (Medicare's HACs applicable
only to inpatient hospital providers paid under the IPPS) and other
provider-preventable conditions (conditions minimally defined as
Medicare's 3 NCDs, applicable in any healthcare service setting).
Comment: One commenter requested clarification on the purpose of
provider reporting and how CMS expects States to use reported
information. Another commenter noted that there is no clear provision
on how States are to report this data to CMS. One State questioned
whether the SPA will have to specify how the reporting will be done, or
if States will need to assure that they will comply with the
requirement.
Response: We are requiring that States impose provider self-
reporting through claims systems because that information will be fed
by States to CMS. CMS and States will use this data to inform policy
making. Language assuring compliance with this provision is
incorporated in the State plan pre-print associated with this
provision.
Comment: One commenter supports nonpayment for all PPCs as they
pertain to the dual eligible population. This
[[Page 32833]]
commenter urges CMS to codify provisions that prohibit Medicaid claim
payment for claims that have been denied by Medicare based on the
presence of a HAC.
Response: This is a significant area of concern, and we have
revised the final regulation to clarify the prohibition on Medicaid
payment for claims that have been denied (in full or in part) by
Medicare, to reflect this recommendation.
Comment: One commenter noted that the proposed rule requires States
to establish a provider reporting requirement for PPCs and requested
that amend the final rule to allow States time to implement the PPC
policies in general.
Response: As a requirement of the final rule, States will implement
the provider self-reporting through payment claims systems regardless
of the provider's intention to bill. We anticipate that States and
providers, especially those groups of providers that have not been
subject to Medicare's HAC policy, will need to work collaboratively to
develop and implement reporting systems that would complement existing
payment structures.
III. Provisions of the Final Rule
This final rule incorporates the provisions of the proposed rule
with the following exceptions.
In Sec. 447.26(b), we are revising the definition of health care-
acquired condition to mean a condition occurring in any inpatient
hospital setting, identified as a HAC by the Secretary under section
1886(d)(4)(D)(iv) of the Act for purposes of the Medicare program
identified in the State plan as described in section 1886(d)(4)(D)(ii)
and (iv) of the Act; other than Deep Vein Thrombosis (DVT)/Pulmonary
Embolism (PE) related to total knee replacement or hip replacement
surgery in pediatric and/or obstetric patients.
In Sec. 447.26(c)(1), we are revising the language to read ``A
State plan must provide that no medical assistance will be paid for
``provider-preventable conditions'' as defined in this section; and as
applicable for individuals dually eligible for both the Medicare and
Medicaid programs.''
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
In accordance with the Act, we solicited public comments on the
proposed collection of information, with a 30-day comment period, in
the proposed rule that published on February 17, 2011 (76 FR 9283). We
did not receive any substantive comments related to the proposed
information collection requirements or burdens and, therefore, we are
retaining the following requirements and estimates that were set out in
the proposed rule.
A. ICRs Regarding Contract Requirements (Sec. 438.6)
Section 438.6(f)(2) will also require States which provide medical
assistance using a managed care delivery system to modify their managed
care contracts to reflect the PPCs payment adjustment policies as
applied through these regulations. The burden associated with this
requirement is the time and effort necessary for a State to amend its
managed care contracts to reflect these policies. We estimated that 48
States will be required to comply with this requirement. We also
estimated that it will take 8 hours for each State to revise its
contracts to comply with this requirement and submit the amended
contract to CMS for review and approval. The total estimated annual
burden associated with this requirement is 384 hours at a cost of
$20.67 per hour per State.
B. ICRs Regarding the Prohibition on Payment for Provider-Preventable
Conditions (Sec. 447.26)
Effective July 1, 2011, Sec. Section 447.26(c)(1) will require
States to submit SPAs for CMS approval that would reduce payments to
providers by amounts related to PPCs. The burden associated with this
requirement will be the time and effort necessary for a State to submit
its SPA and the associated pre-print. We estimated that 50 States, the
District of Columbia, and Territories will be required to comply with
this requirement. We further estimated that it will take each State 7
hours to submit the aforementioned documentation to CMS. The total
estimated burden associated with this requirement would be 385 hours at
a cost of $20.67 per hour per State.
We estimated that it will take each State 7 hours because we intend
to issue a template to States to simplify the process of making the
related amendment to the Medicaid State plan.
Section 447.26(c)(2) will also require States to implement provider
reporting requirements to ensure that PPCs are identified in claims for
Medicaid payment. The burden associated with this requirement is the
time and effort necessary to develop and implement provider reporting
requirements that are effective with the provisions of this regulation.
We estimated that 50 States, the District of Columbia, and Territories
will be required to comply with this requirement. We estimated that it
will take 24 hours for each State to develop and implement the provider
reporting requirements as specified above. The total estimated burden
associated with this requirement will be 1320 hours at a cost of $20.67
per hour per State. We believe that this estimate is reasonable because
we are requiring that States have providers use their existing claims
processes to report identified events.
[[Page 32834]]
Table 1--Annual Recordkeeping and Reporting Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly
Burden Total labor Total labor Total
Regulation section(s) OMB Control No. Number of Number of per annual cost of cost of capital/ Total cost
respondents responses response burden reporting reporting maintenance ($)
(hours) (hours) ($) ($) costs ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
438.6(f)(2)................... 0938-NEW.......... 48 48 8 384 20.67 7,937.28 0 7,937.28
447.26(c)(1).................. 0938-NEW.......... 55 55 7 385 20.67 7957.95 0 7,957.5
447.26(c)(2).................. 0938-NEW.......... 55 55 24 1,320 20.67 27,284.4 0 27,284.4
-------------------------------------------------------------------------------------------------------------------------
Total..................... .................. 158 158 39 2089 .......... ........... 0 43,179.18
--------------------------------------------------------------------------------------------------------------------------------------------------------
The estimated annual burden associated with the requirements under
438.6(f)(2), 447.26(c)(1), and 447.26(c)(2) is 2,089 hours (total) at a
cost of $43,179.18 (total) or $806.13 (per State).
Table 2--Annual Recordkeeping and Reporting Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly
Burden Total labor Total labor Total
Regulation section(s) OMB Control No. Number of Number of per annual cost of cost of capital/ Total cost
respondents responses response burden reporting reporting maintenance ($)
(hours) (hours) ($) ($) costs ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
438.6(f)(2)................... 0938-NEW.......... 48 48 8 384 20.67 7,937.28 0 7,937.28
447.26(c)(1).................. 0938-NEW.......... 50 50 7 350 20.67 7,234.5 0 7,234.5
447.26(c)(2).................. 0938-NEW.......... 50 50 24 1,200 20.67 2,4804 0 2,4804
-------------------------------------------------------------------------------------------------------------------------
Total..................... .................. 98 148 39 1,934 .......... ........... 0 39,975.78
--------------------------------------------------------------------------------------------------------------------------------------------------------
The estimated annual burden associated with the requirements under
438.6(f)(2), 447.26(c)(1), and 447.26(c)(2) is 1,934 hours (total) at a
cost of $39,975.78 (total) or $806.13 (per State).
To be assured consideration, comments and recommendations for the
proposed information collections must be received by the OMB desk
officer at the address below, no later than 5 p.m. on July 7, 2011.
OMB, Office of Information and Regulatory Affairs, Attention: CMS
Desk Officer, Fax Number: (202) 395-5806. Fax Number: (202) 395-6974.
V. Regulatory Impact Statement
A. Statement of Need
This final rule implements section 2702 of the Affordable Care Act
which directs the Secretary to issue Medicaid regulations effective as
of July 2011, prohibiting Federal payments to States (under section
1903 of the Act) for any amounts expended for providing medical
assistance for HCACs. It will also authorize States to identify other
PPCs for which Medicaid payment would be prohibited. We view this
regulation as one step of a larger approach to address the problem of
PPCs.
B. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(February 2, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), Executive Order
13132 on Federalism (August 4, 1999), and the Congressional Review Act
(5 U.S.C. 804(2)).
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). This rule
does not reach the economic threshold and thus is not considered a
major rule under the Congressional Review Act.
It is difficult to estimate the amount which will be withheld from
providers under this regulation, as not all of these events will be
billed. However, it is instructive to note that the total dollar amount
of Medicare claims denied under its HAC policy is approximately $20
million per year (see 75 FR 23895, May 4, 2010). The original
regulation creating the Medicare HACs was published in the August 19,
2008 Federal Register (73 FR 48433). In addition, estimates were
conducted by the Congressional Budget Office (CBO) and the CMS Office
of the Actuary (OACT) on the impact of section 2702 of the Affordable
Care Act. The CBO estimate concluded there would be no impact
associated with section 2702 of the Affordable Care Act (CBO and JCT,
2010 Estimate). The CMS OACT estimate (Estimated Financial Effects of
the ``Patient Protection and Affordable Care Act,'' as Amended, 2010)
projected an impact from section 2702 of the Affordable Care Act on the
Medicaid program of cost savings of $2 million for FY 2011 ($1 million
for the Federal share and $1 million for the State share), with an
aggregate cost savings of $35 million ($20 million for the Federal
share and $15 million for the State share) for FYs 2011 through 2015.
The Federal and State share cost savings, as result of denied payments,
are represented by the reduction in transfers from Medicaid to
hospitals. These estimates could be higher if States elect to expand
beyond the minimum requirements of this rule.
[[Page 32835]]
Table 3--Medicaid Impacts for FYs 2011 Through 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY impact ($ millions)
Medicaid impacts -----------------------------------------------------------------------------------------------
2011 2012 2013 2014 2015 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Federal Share........................................... -1 -4 -5 -5 -5 -20
State Share............................................. -1 -3 -3 -4 -4 -15
-----------------------------------------------------------------------------------------------
Total............................................... -2 -7 -8 -9 -9 -35
--------------------------------------------------------------------------------------------------------------------------------------------------------
There are administrative cost impacts on States to modify their
systems to meet reporting requirements, but we believe these are not
significant. As noted above, the reporting system in this final rule
relies on an existing billing system currently in place. Both States
and providers already have billing, claiming, and payment systems in
place to act upon the information obtained. The costs reported in
section IV of this final rule, Collection of Information Requirements,
amount to an additional $39,976 dollars aggregate across all States.
Hospitals may incur additional costs to reduce PPCs. Such costs
include hiring additional nurses to ensure enforcement of the infection
prevention policies. In turn, preventing or reducing HCACs will lead to
a reduction in direct health spending, which is a benefit realized by
Medicaid, hospitals and other payers.
The Joint Commission requires hospitals to have established
programs for Quality Improvement, Risk Management, Safety, and
Infection Control. As a result, a majority of hospitals already have in
place programs to avert Medicare HACs and thus would not incur new
costs to implement parallel programs to avert Medicaid HCACs.
Furthermore, we anticipate a public benefit to all providers and payers
since programs that hospitals develop to avoid Medicaid HCACs will
likely benefit all patients and reduce health care costs. Patient
benefits resulting from a reduction in HCAC may include an increase in
healthy years of life. However, this public benefit will derive from
possible responses by hospitals and not from this regulation itself.
We realize that the overall problem of HCACs cannot be completely
addressed in this regulation, as this final regulation is one step of
an overall approach. Consequently, the estimated economic impacts from
all HHS initiatives to address HCACs may result in much higher savings
impact than presented in this analysis. However, such economic savings,
for example, will not derive from this regulation alone, but will in
part come from the knowledge that State and Federal governments gain
from the reporting requirements created by this regulation. That
knowledge will in turn inform future HHS initiatives to reduce excess
morbidity and mortality attributable to PPCs.
The RFA requires agencies to analyze options for regulatory relief
for small entities, if a rule has a significant impact on a substantial
number of small entities. Most hospitals, other providers, and
suppliers are small entities, either by nonprofit status or by having
revenues of $7.0 million to $34.5 million in any 1 year. Individuals
and States are not included in the definition of a small entity.
Guidance issued by the Department of Health and Human Services
interpreting the RFA considers effects to be economically significant
if they reach a threshold of 3 to 5 percent or more of total revenue or
total costs. As illustrated in Table 1, any decrease in payments, as a
result of this regulation, to small entities should be significantly
less than this threshold. Therefore, we are not preparing an analysis
for the RFA because the Secretary has determined that this final rule
will not have a significant economic impact on a substantial number of
small entities.
In addition, section 1102(b) of the Act requires us to prepare a
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 604 of the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a Metropolitan Statistical Area for Medicare
payment regulations and has fewer than 100 beds. We are not preparing
an analysis for section 1102(b) of the Act because the Secretary has
determined that this final rule will not have a significant impact on
the operations of a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2011, that
threshold is approximately $136 million. This rule will have no
consequential effect on State, local, or tribal governments in the
aggregate or on the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. While this regulation does not impose substantial costs
on State or local governments, it does preempt some State laws. The
requirements of Executive Order 13132 are applicable.
Executive Order 13132 sets forth a process to be followed by the
Federal government whenever Federal regulatory processes may affect or
preempt State regulations or laws. We are aware that many States do
have regulations for Medicaid nonpayment in the event that specified
adverse events occur during provider care. This final rule is intended
to create a Federal legal minimum for such State regulations. States
could continue to enact more stringent laws or regulations upon
approval of a Medicaid SPA by CMS to assure that there is no adverse
impact on Medicaid beneficiary access to care.
This final rule derives from section 2702 of the Affordable Care
Act and other CMS statutory authority. Under the requirements of
Executive Order 13132 and the requirements of section 2702 of the
Affordable Care Act, we have consulted with the States before issuing
this final rule. Major portions of the regulation are, in fact, derived
from comparable State regulations. Significant regulatory authority in
this area would remain with the States should the proposed regulation
become final. As stated, the final rule does not completely preempt
State law, but merely sets a Federal minimum standard.
We are meeting the requirements of Executive Order 13132 by issuing
this final rule 30 days prior to the effective
[[Page 32836]]
date of July 1, 2011, set forth in the Affordable Care Act.
C. Anticipated Effects
1. Effects on State Medicaid Programs
The effects on State Medicaid programs as a result of this
provision will depend on various factors. For instance, as we state in
the preamble, there are 21 States that have already implemented similar
policies. While we have reviewed existing State policies and
incorporated those policies that we believe would best apply on a
national level, these States will have to make changes to comply with
the minimums set in this final rule. In addition, States will have to
work through the SPA review process to ensure that their existing
policies do not serve to limit beneficiaries' access to healthcare.
The States that have used State plan authority to implement their
nonpayment policies will need to review their policies and ensure that
they comply with any final provisions of these rules. These States will
likely have to submit revisions to their State plans. In addition, the
States that implemented these policies through some other authority
like State law or administrative procedures will have to submit new
SPAs for review and work with CMS to ensure that their policies
effective July 1, 2011, are in line with the final provisions of these
rules. States that have elected not to implement Medicaid specific
policies or that do not have related policies at all will need to
submit new SPAs. Further, States which use a managed care delivery
system to provide Medicaid benefits to beneficiaries will have to amend
and submit for CMS review and approval managed care contracts that
reflect these new requirements. While this regulation is effective on
July 1, 2011, most States will already have their managed care
contracts for the fiscal year in place by that time and there may be
some delay in incorporating new language in their managed care
contracts. We will issue subregulatory guidance to States requiring
that appropriate changes be made to managed care contracts to comply
with the regulation.
All States will need to incorporate the reporting requirements into
their claims systems. In addition, States will need to evaluate the
best ways in which to identify and reduce payment for PPCs under their
respective Medicaid plans.
We anticipate that this provision will prompt programmatic changes
for States regarding quality improvement considerations within health
care systems. This provision, while it is a payment provision, is
primarily targeted at preventing medical errors.
2. Effects on Other Providers
We anticipate that these provisions will prompt health care
providers to adopt quality programs that would limit the risk of
providing services or using resources, in error, that will not be
reimbursed.
We anticipate that the reporting requirements will ultimately be a
catalyst for providers in developing quality practices to reduce the
risks associated with receiving care at their facilities and promote
overall quality improvements.
3. Effects on the Medicaid Program
Medicare's and States' experience has demonstrated that related
policies often do not produce substantial short-term financial savings
within health care systems. Medicare estimated that the policy will
reduce its spending by an aggregate amount of about $80,000,000 from FY
2009 through FY 2013, or by less than 0.01 percent of total annual
spending on inpatient hospital services (75 FR 50661). States report
similar short-term savings. However, there are more significant gains
to be realized when considering the broader impact of increased quality
on the health system overall, or more exactly the savings created when
preventable conditions and related treatment are measured.
The anticipated public benefit to all providers and payers from
programs that hospitals develop to avoid Medicaid HCACs will likely
benefit all patients and reduce health care costs. This includes, for
example, Medicaid beneficiaries realizing an increase in healthy years
of life as a result of the reduction in HCACs. However, this public
benefit will derive from possible responses by hospitals and not from
this regulation itself.
D. Alternatives Considered: Conditions Identified as Provider-
Preventable Conditions
The statute requires that Medicaid, at a minimum, recognize
Medicare's current list of HACs. We considered proposing regulatory
action that included only the conditions listed as Medicare HACs.
However, when considering current State practices our research
concluded that many States' policies included conditions not identified
by Medicare as HACs. We concluded that such limited action would not
serve the program purposes of ensuring high quality care and would
potentially limit State flexibility to protect beneficiaries and
program integrity. Similarly, we considered proposing regulatory action
that included only the inpatient hospital setting. Again, after
assessing current State practices, as well as industry-based research,
there is clear indication that data is available to States that will
allow them to employ evidence based policy practices beyond the
inpatient hospital setting. To provide States full flexibility to
protect beneficiaries and the program, we elected the more
comprehensive approach that we discussed in the proposed rule. We
considered defining OPPC as, ``a condition occurring in any health care
setting that could have reasonably been prevented through the ordinary
provision of high quality care during the course of treatment * * *''
We believed that this terminology would limit additional requirements
on States to produce evidence of preventability. However, after
discussing the terminology and scientific parameters that exist in
relation to this issue, we proposed that the term be defined as, ``a
condition that could have reasonably been prevented through the
application of evidence based guidelines.''
E. Conclusion
For the reasons outlined in the RIA, we are not preparing an
analysis for either the RFA or section 1102(b) of the Act because we
have determined that this final rule would not have a direct
significant economic impact on a substantial number of small entities
or a direct significant impact on the operations of a substantial
number of small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects
42 CFR Part 434
Grant programs--health, Health maintenance organizations (HMO),
Medicaid, Reporting and recordkeeping requirements.
42 CFR Part 438
Grant programs--health, Medicaid, Reporting and recordkeeping
requirements.
42 CFR Part 447
Accounting, Administrative practice and procedure, Drugs, Grant
programs--health, Health facilities, Health professions, Medicaid,
Reporting and recordkeeping requirements, Rural areas.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR parts 434, 438, and 447, as set forth
below:
[[Page 32837]]
PART 434--CONTRACTS
0
1. The authority citation for part 434 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
Subpart A--General Provisions
0
2. Section 434.6 is amended by--
0
A. Revising the introductory text of paragraph (a).
0
B. Removing the semicolons from the end of paragraphs (a)(1) through
(a)(9), and the semicolon and the word ``and'' from the end of
paragraph (a)(10) and replacing them with a period.
0
C. Adding a new paragraph (a)(12).
The revision and addition read as follows:
Sec. 434.6 General requirements for all contracts and subcontracts.
(a) Contracts. All contracts under this part must include all of
the following:
* * *
(12) Specify the following:
(i) No payment will be made by the contractor to a provider for
provider-preventable conditions, as identified in the State plan.
(ii) The contractor will require that all providers agree to comply
with the reporting requirements in Sec. 447.26(d) of this subchapter
as a condition of payment from the contractor.
(iii) The contractor will comply with such reporting requirements
to the extent the contractor directly furnishes services.
* * * * *
PART 438--MANAGED CARE
0
3. The authority citation for part 438 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
Subpart A--General Provisions
0
4. Section 438.6 is amended by revising paragraph (f) to read as
follows:
Sec. 438.6 Contract requirements.
* * * * *
(f) Compliance with contracting rules. All contracts must meet the
following provisions:
(1) Comply with all applicable Federal and State laws and
regulations including title VI of the Civil Rights Act of 1964; title
IX of the Education Amendments of 1972 (regarding education programs
and activities); the Age Discrimination Act of 1975; the Rehabilitation
Act of 1973; and the Americans with Disabilities Act of 1990 as
amended.
(2) Provide for the following:
(i) Compliance with the requirements mandating provider
identification of provider-preventable conditions as a condition of
payment, as well as the prohibition against payment for provider-
preventable conditions as set forth in Sec. 434.6(a)(12) and Sec.
447.26 of this subchapter.
(ii) Reporting all identified provider-preventable conditions in a
form or frequency as may be specified by the State.
(3) Meet all the requirements of this section.
* * * * *
PART 447--PAYMENTS FOR SERVICES
0
5. The authority citation for part 447 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
Subpart A--Payments: General Provisions
0
6. Section 447.26 is added to read as follows:
Sec. 447.26 Prohibition on payment for provider-preventable
conditions.
(a) Basis and purpose. The purpose of this section is to protect
Medicaid beneficiaries and the Medicaid program by prohibiting payments
by States for services related to provider-preventable conditions.
(1) Section 2702 of the Affordable Care Act requires that the
Secretary exercise authority to prohibit Federal payment for certain
provider preventable conditions (PPCs) and health care-acquired
conditions (HCACs).
(2) Section 1902(a)(19) of the Act requires that States provide
care and services consistent with the best interests of the recipients.
(3) Section 1902(a)(30) of the Act requires that State payment
methods must be consistent with efficiency, economy, and quality of
care.
(b) Definitions. As used in this section--
Health care-acquired condition means a condition occurring in any
inpatient hospital setting, identified as a HAC by the Secretary under
section 1886(d)(4)(D)(iv) of the Act for purposes of the Medicare
program identified in the State plan as described in section
1886(d)(4)(D)(ii) and (iv) of the Act; other than Deep Vein Thrombosis
(DVT)/Pulmonary Embolism (PE) as related to total knee replacement or
hip replacement surgery in pediatric and obstetric patients.
Other provider-preventable condition means a condition occurring in
any health care setting that meets the following criteria:
(i) Is identified in the State plan.
(ii) Has been found by the State, based upon a review of medical
literature by qualified professionals, to be reasonably preventable
through the application of procedures supported by evidence-based
guidelines.
(iii) Has a negative consequence for the beneficiary.
(iv) Is auditable.
(v) Includes, at a minimum, wrong surgical or other invasive
procedure performed on a patient; surgical or other invasive procedure
performed on the wrong body part; surgical or other invasive procedure
performed on the wrong patient.
Provider-preventable condition means a condition that meets the
definition of a ``health care-acquired condition'' or an ``other
provider-preventable condition'' as defined in this section.
(c) General rules.
(1) A State plan must provide that no medical assistance will be
paid for ``provider-preventable conditions'' as defined in this
section; and as applicable for individuals dually eligible for both the
Medicare and Medicaid programs.
(2) No reduction in payment for a provider preventable condition
will be imposed on a provider when the condition defined as a PPC for a
particular patient existed prior to the initiation of treatment for
that patient by that provider.
(3) Reductions in provider payment may be limited to the extent
that the following apply:
(i) The identified provider-preventable conditions would otherwise
result in an increase in payment.
(ii) The State can reasonably isolate for nonpayment the portion of
the payment directly related to treatment for, and related to, the
provider-preventable conditions.
(4) FFP will not be available for any State expenditure for
provider-preventable conditions.
(5) A State plan must ensure that non-payment for provider-
preventable conditions does not prevent access to services for Medicaid
beneficiaries.
(d) Reporting. State plans must require that providers identify
provider-preventable conditions that are associated with claims for
Medicaid payment or with courses of treatment furnished to Medicaid
patients for which Medicaid payment would otherwise be available.
Authority: (Catalog of Federal Domestic Assistance Program No.
93.778, Medical Assistance Program)
[[Page 32838]]
Dated: May 25, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
Approved: May 27, 2011.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2011-13819 Filed 6-1-11; 11:15 am]
BILLING CODE 4120-01-P